Venezuela – USA Transport Tax Agreement (1987)

U.S.A. — VENEZUELA TRANSPORT TAX TREATY (1987)

This Treaty was signed on December 29, 1987 and entered into force on December 29, 1987.

AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE REPUBLIC OF VENEZUELA FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO SHIPPING AND AIR TRANSPORT

Article 1

For the purposes of this agreement:

1.

(a) The term “U.S. tax” means the Federal income taxes imposed by the Internal Revenue Code, including the tax on gross income imposed by section 887.

(b) The term “Venezuelan tax” means the Tax on Income (Impuesto sobre la Renta).

2. The term “Contracting State” means the United States or Venezuela, as the case may be.

3. The term “enterprise of a Contracting State” means:

(a) in the case of a Venezuelan enterprise, enterprises owned by the Government of Venezuela, Venezuelan public entities, whether national or local in character, and individuals who are residents of Venezuela for tax purposes and not citizens of the United States, or by corporations or companies created and organized under the laws of Venezuela and having their seat of effective management in Venezuela.

(b) in the case of a United States enterprise, an enterprise owned by the Government of the United States or a political subdivision or local authority thereof, or by individuals who are citizens or residents of the United States and not residents of Venezuela, or by companies created under the laws of the United States.

(c) It is understood that for a corporation to claim the benefits of this Agreement as an enterprise of a Contracting State, it must satisfy the requirements of the law of the other Contracting State designed to limit such benefits to corporations owned by residents of the first-mentioned State.

4. The term “profits and income” means all income derived from the international operation of ships or aircraft, including income from the rental of ships or aircraft an a full (time or voyage) basis. It also includes income from the rental on a bareboat basis of ships and aircraft used in international transport, income from the rental of containers and related equipment used in international transport, and gains from the alienation of ships, aircraft or containers operated in international transport, provided that such activity of rental or alienation is incidental to the international operation of ships or aircraft.

5. The term “competent authority” means:

(a) in the case of the United States, the Secretary of the Treasury or his delegate; and

(b) in the case of Venezuela, the General Directorate of Revenues of the Ministry of Finance.

6. The term “international operation of ships or aircraft” means the activity of transporting by ship or aircraft passengers, cargo, or mail and other directly related activities carried on by the owner, lessor or charterer of ships or aircraft.

Article 2

1. Subject to the provision of Article 3 of this Agreement, profits and income from the international operation of ships or aircraft derived by an enterprise of a Contracting State shall be exempt from tax in the other Contracting State.

2. The provisions of this Article shall also apply to profits or income from participation in a pool, a joint business, or an international operating agency.

Article 3

The exemption provided by Article 2 shall apply to an enterprise of a Contracting State which serves a port or an airport situated in the territory of the other Contracting State.

Article 4

The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulty or doubt arising as to the application of this Agreement.

Article 5

The competent authorities of the Contracting States will endeavor to assure that the tax benefits provided in this Agreement are not enjoyed by enterprises of third States.

Article 6

The Contracting States shall notify each other through diplomatic channels when the constitutional requirements for the entry into force of this Agreement have been satisfied. The Agreement shall enter into force on the date of the later of these notifications and shall have effect with respect to taxable years beginning on or after January 1, 1987.

Article 7

This Agreement may be terminated by either Contracting State giving notice of termination through diplomatic channels. In such case it shall cease to have effect with respect to taxable years beginning on or after January 1 of the calendar year following the year in which the notice of termination was given.

Done at Caracas this twenty ninth day of December, nineteen hundred eighty seven, in duplicate, in the English and Spanish languages, each text being equally authentic.