St. Vincent and the Grenadines – USA Transport Tax Agreement (1989)

Transportation Tax Agreement (1989)

This Treaty was signed on February 15, 1989 and entered into force on February 15, 1989.

Agreement Between the UNITED STATES OF AMERICA and ST. VINCENT AND THE GRENADINES

The American Embassy to the Ministry of Foreign Affairs of St. Vincent and the Grenadines
EMBASSY OF THE UNITED STATES OF AMERICA

No. 36

The Embassy of the United States of America presents its compliments to the Ministry of Foreign Affairs of St. Vincent and the Grenadines and has the honor to propose that the two Governments conclude an agreement to exempt from income tax, on a reciprocal basis, income derived by residents of the other country from the international operation of ships and aircraft. The terms of the agreement are as follows:

The Government of the United States of America, in accordance with sections 872(B) and 883(A) of the Internal Revenue Code, agrees to exempt from tax gross income derived from the international operation of ships or aircraft by individuals who are residents of St. Vincent and the Grenadines (other than U.S. citizens) and corporations organized in St. Vincent and the Grenadines. This exemption is granted on the basis of equivalent exemptions granted by St. Vincent and the Grenadines to citizens of the United States (who are not residents of St. Vincent and the Grenadines) and to corporations organized in the United States (which are not subject to tax by St. Vincent and the Grenadines on the basis of residence).

In the case of a corporation, the exemption shall apply only if the corporation meets either of the following conditions:

(1) More than 50 percent of the value of the corporation’s stock is owned, directly or indirectly, by individuals who are residents of St. Vincent and the Grenadines or of another country which grants a reciprocal exemption to U.S. citizens and corporations;

(2) The corporation’s stock is primarily and regularly traded on an established securities market in St. Vincent and the Grenadines, or is wholly owned by a corporation whose stock is so traded and which is also organized in the United States.

For purposes of subparagraph 1, the Government of St. Vincent and the Grenadines will be treated as an individual resident of St. Vincent and the Grenadines. For purposes of the exemption from U.S. tax, subparagraph (1) will be considered to be satisfied if the corporation is a “controlled foreign corporation” under the internal revenue code.

Gross income includes all income derived from the international operation of ships or aircraft, including income from the rental of ships or aircraft on a full (time or voyage) basis and income from the rental of containers and related equipment which is incidental to the international operation of ships or aircraft. It also includes income from rental on a bareboat basis of ships and aircraft used for international transport.

The Embassy of the United States of America considers that this note, together with the Ministry’s reply note confirming that the Government of St. Vincent and the Grenadines agrees to these terms, constitutes an agreement between the two Governments. This agreement shall enter into force on the date of the Ministry’s reply note and shall have effect with respect to taxable years beginning on or after January 1, 1987.

Either Government may terminate this agreement by giving written notice of termination through diplomatic channels.

The Embassy of the United States of America avails itself of this opportunity to renew to the Ministry of Foreign Affairs of St. Vincent and Grenadines the assurances of its highest consideration.

Embassy of the United States of America,
Bridgetown, Barbados, October 11, 1988

Ministry of Foreign Affairs of St. Vincent and the Grenadines to the American Embassy

Ministry of Foreign Affairs
Office of the Prime Minister
St. Vincent and the Grenadines
West Indies
Ref. No. F.A. 600.1
Note No: 27/89

The Ministry of Foreign Affairs of St. Vincent and the Grenadines presents its compliments to the Embassy of the United States of America and has the honour to acknowledge receipt of the latter’s Note No. 36 of 11th October, 1988, proposing the terms of a reciprocal exemption from Income Tax of income derived from the international operation of ships and aircraft.

The Government of St. Vincent and the Grenadines agrees to exempt from tax gross income derived from the international operation of ships or aircraft by United States citizens (who are not residents of St. Vincent and the Grenadines) and corporations organized in the United States (other than corporations which are subject to tax by St. Vincent and the Grenadines on the basis of residence).

In the case of a corporation, the exemption shall apply only if the corporation meets either of the following conditions:

1. More than fifty (50) percent of the value of the corporation’s stock is owned, directly or indirectly, by individuals who are citizens of the United States or of another country which grants a reciprocal exemption to St. Vincent and the Grenadines’ residents and corporations; or

2. The corporation’s stock is primarily and regularly traded on an established securities market in the United States, or is wholly owned by a corporation whose stock is so traded and which is also organized in the United States.

Gross income includes all income derived from the international operation of ships or aircraft, including income from the rental of ships or aircraft on a full (time or voyage) basis and income from the rental of containers and related equipment which is incidental to the international operation of ships or aircraft. It also includes income from the rental on a bareboat basis of ships and aircraft used for international transport.

The Ministry of Foreign Affairs is pleased to confirm that the Embassy’s Note and this reply Note constitute an agreement between the two Governments, which shall enter into force on today’s date and shall have effect with respect to taxable years beginning on or after January 1, 1987.

Either Government may terminate this agreement by giving written notice of termination through diplomatic channels.

The Ministry of Foreign Affairs of St. Vincent and the Grenadines avails itself of this opportunity to renew to the Embassy of the United States of America the assurances of its highest consideration.

15th February, 1989