Barbados and the United States of America, desiring to conclude a convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows: ARTICLE 1 General Scope 　　1. This Convention shall apply to persons who are residents of one or both of the Contracting States, except as otherwise provided in the Convention. 　　2. The Convention shall not restrict in any manner any exclusion, exemption, deduction, credit, or other allowance now or hereafter accorded 　　a) by the laws of either Contracting State; or 　　b) by any other agreement between the Contracting States. 　　3. Notwithstanding any provision of the Convention except paragraph 4, a Contracting State may tax its resident (as determined under Article 4 (Residence)), and by reason of citizenship may tax its citizens, as if the Convention has not come into effect. For this purpose, the term "citizen" shall include a former citizen whose loss of citizenship had as one of its principal purposes the avoidance of tax, but only for a period of 10 years following such loss. 　　4. The provisions of paragraph 3 shall not affect 　　a) the benefits conferred by a Contracting State under paragraph 2 Article 9　(Associated Enterprises), and paragraphs 1 b) and 4 of Article 18 (Pensions, Annuities, Alimony, and Child Support), and under Articles 23 (Relief From Double Taxation), 24 (Non- Discrimination), and 25 (Mutual Agreement Procedure); and 　　b) the benefits conferred by a Contracting State under Articles 19 (Government Service), 20 (Students and Apprentices), and 27 (Diplomatic Agents and Consular Officers), upon individuals who are neither citizens of, nor have immigrant status in, that State. ARTICLE 2 Taxes Covered 1. The existing taxes to which this Convention shall apply are 　　a) in the United States: the Federal income taxes imposed by the Internal Revenue Code (but excluding the accumulated earnings tax, except provided in paragraph 5 of Article 10, the personal holding company tax, and social security taxes), and the excise taxes imposed on insurance premiums paid to foreign insurers and with respect to private foundations. The Convention shall, however, apply to the excise taxes imposed on insurance premiums paid to foreign insurers only to the extent that the risks covered by such premiums are not reinsured with a person not entitled to the benefits of this or any other convention which applies to these taxes; b) in Barbados: Income Tax (including premium income tax), Corporation Tax (including the tax on branch profits), and Petroleum Winning Operations Tax. 　　2 The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting State shall notify each other of any significant changes which have been made in their respective taxation laws and of any official published material concerning the application of the Convention, including explanations, regulations, rulings, or judicial decisions. ARTICLE 3 General Definitions 　　1. In this Convention, unless the context otherwise requires: 　　a) (i) the term ''United States'' means the United States of America. When used in a geographic sense it means the states thereof, the District of Columbia, the territorial waters of the United States, and any area beyond the territorial waters which, in accordance with international law and the laws of the United States is, or may hereafter be, an area within which the rights of the United States with respect to natural resources may be exercised. The term does not include Puerto Rico, the Virgin Islands, Guam or any other United States Possession or territory; 　　(ii) the term ''Barbados'' means the island of Barbados and the territorial waters　thereof, including any area outside such territorial waters which in accordance with　international law and the laws of Barbados is an area within which the rights of　Barbados with respect to the seabed and subsoil and their natural resources may be exercised; 　　b) the term ''person'' includes an individual, an estate, a trust, a company, partnership　and any other body of persons; 　　c) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes; d) the terms "enterprise of a Contracting State'' and ''enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; 　　e) the term "competent authority" means: 　　(i) in the case of the United States of America, the Secretary of the Treasury or his delegate; 　　(ii) in the case of Barbados, the Minister of Finance and Planning or his　authorized representative; 　　f) the term "national" means: 　　(i) in relation to the United States 　　a) any individual who is a citizen of the United States; 　　b) any company, association or other entity deriving its status as such from the laws of the United States or any political subdivision thereof; 　　(ii) in relation to Barbados 　　a) any individual who is a citizen of Barbados; 　　b) any company, association or other entity deriving its status as such from the laws of Barbados; 　　g) the term ''international traffic'' means any transport by a ship or aircraft, except when such transport is solely between places in the other Contracting State. 2. As regards the application of the Convention by a Contracting State any term not defined therein shall, unless the context otherwise requires or the competent authorities agree to a common meaning pursuant to the provisions of Article 25 (Mutual Agreement Procedure), have the meaning which it has under the laws of that State concerning the taxes to which the Convention applies. ARTICLE 4 Residence 　　1. For the purposes of this Convention: 　　a) the term "resident of Barbados'' means: 　　(i) any person, other than a company, resident in Barbados for the purposes of Barbados tax, but in the case of a partnership, estate or trust, only to the extent the income derived by such partnership, estate or trust is subject to Barbados tax as the income of a resident either in its hands or in the hands of its partners or beneficiaries; and 　　(ii) a company whose business is managed and controlled in Barbados. 　　b) the term ''resident of the United States" means: (i) any person, other than a company, resident in the United States for the　purpose of United States tax; but in the case of a partnership, estate or trust, only to the extent that the income derived by such partnership, estate or trust is subject to United States tax as the income of a resident, either in its hands or in the hands of its partners or beneficiaries; and 　　(ii) a company created under the laws of the United States or a political subdivision thereof. 　　2. Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his status shall be determined as follows: 　　a) he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (center of vital interests); b) if the State in which he has his center of vital interests cannot be determined, or if he does not have a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode; 　　c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national; d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 　　3. Where by reason of the provisions of paragraph 1 a company is a resident of both Contracting States, then if it is created under the laws of a Contracting State or a political subdivision thereof, it shall be deemed to be a resident of that State. 　　4. Where by reason of the provisions of paragraph 1 a person other than an individual or a company is a resident of both Contracting States, the competent authorities of the Contracting States shall settle the question by mutual agreement and determine the mode of application of the Convention to such person. ARTICLE 5 Permanent Establishment 1. For the purposes of this Convention, except as otherwise specified in this Article, the term "permanent establishment" means a regular place of business through which the business of an enterprise is wholly or partly carried on. 　　2. The term ''permanent establishment" shall include especially: 　　a) a place of management; 　　b) a branch; 　　c) an office; 　　d) a factory; 　　e) a workshop; 　　f) a store or premises used as a sales outlet; 　　g) a warehouse, in relation to a person providing storage facilities for others; 　　h) a mine, an oil or gas well, a quarry, or any other place of extraction of natural resources; 　　i) a building site or construction, assembly or installation, or drilling rig or ship used for the exploration or development of natural resources within a Contracting State, but only if such site, or activity continues within the State for a period or periods aggregating more than 183 days in any twelve-month period (including the period of any supervisory activity connected therewith), provided that a permanent establishment shall not exist in any taxable year in which such site or activity continues within that State for a period or periods aggregating less than 30 days in that taxable year; 　　j) a dredging project within a Contracting State, but only where such project continues within the State for a period or periods aggregating more than 120 days in any twelve-month period (including the period of any supervisory activity connected therewith), provided that a permanent establishment shall not exist in any taxable year in which such site, project or activity continues within that State for a period or periods aggregating less than 30 days in that taxable year; 　　k) the furnishing of services, including consultancy, management, technical and supervisory services, within a Contracting State by an enterprise through employees or other persons, but only if (i) activities of that nature continue within the State for a period or periods aggregating more than 90 days in a twelve-month period, provided that a permanent establishment shall not exist in any taxable year in which such services are rendered in that State for a period or periods aggregating less than 30 days in the taxable year; or 　　(ii) the services are performed within the State for an associated enterprise (within the meaning of Article 9 (Associated Enterprises)); 　　l) the maintenance of substantial equipment or machinery within a Contracting State but only if such equipment or machinery is maintained within that State for a period of more than 120 consecutive days, provided that a permanent establishment shall not exist in any taxable year in which such equipment or machinery is maintained within that State for a period or periods aggregating less than 30 days in that taxable year. 　　3. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include any one or more of the following: 　　a) the use of facilities solely for the purpose of storage, display, or delivery of goods or merchandise belonging to the enterprise, other than goods or merchandise held for sale by such enterprise in a store or premises used as a sales outlet; 　　b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery, other than goods or merchandise held for sale by such enterprise in a store or premises used as a sales outlet; 　　c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; 　　d) the maintenance of a regular place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise; 　　e) the maintenance of a regular place of business solely for the purpose of advertising,　for the supply of information, for scientific research or for similar activities which have a　preparatory or auxiliary character, for the enterprise. 　　4. If an enterprise of a Contracting State does not have a permanent establishment in the other Contracting State under paragraphs 1, 2, and 3, but goods and merchandise are either: 　　a) subjected to processing in that other Contracting State by another person (whether　or not purchased in that other Contracting State); or 　　b) purchased in that other Contracting State (and such goods or merchandise are not　subjected to processing outside that other Contracting State.) 　　then such enterprise shall be considered to have a permanent establishment in that other Contracting State to the extent that all or part of such goods or merchandise is sold by or on behalf of such enterprise for use, consumption, or disposition in that other Contracting State. 　　5. Notwithstanding the provisions of paragraphs 1 and 2, a person (other than an agent of an independent status to whom paragraph 6 applies) acting in a Contracting State on behalf of an enterprise of the other Contracting State shall be deemed to be a permanent establishment of that enterprise in the first-mentioned State if: 　　a) he has and habitually exercises in the first-mentioned State an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to those mentioned in paragraph 3 which, if exercised through a regular place of business, would not make that regular place of business a permanent establishment under the provisions of that paragraph (subject to the provisions of paragraph 4); or 　　b) he habitually maintains in the first-mentioned State a stock of goods or merchandise　from which he regularly delivers goods or merchandise on behalf of the enterprise, and　additional activities conducted in that State on behalf of the enterprise have contributed to the sale of the goods or merchandise. 　　6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent, or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such persons are devoted substantially on behalf of that enterprise, he shall not be considered an agent of independent status within the meaning of this paragraph if the transactions between the agent and the enterprise were not made under arm's length　conditions. 　　7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. Article 6 Income from Real Property (Immovable Property) 　　1. Income derived by a resident of a Contracting State from real property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State. 　　2. The term "real property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. 　　3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of real property. 　　4. The provisions of paragraphs 1 and 3 shall also apply to the income from real property of an enterprise and to income from real property used for the performance of independent personal services. ARTICLE 7 Business Profits 　　1. The business profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on or has carried on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on or has carried on business as aforesaid, the business profits of the enterprise may be taxed in the other State but only so much of them as is attributable to: 　　a) that permanent establishment; 　　b) sales in the other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment; or c) other business activities carried on the other State of the same or similar kind as those effected through that permanent establishment. 2. Where a resident of one of the Contracting States has a permanent establishment in the other Contracting State, there shall in each Contracting State be attributed to the permanent establishment business profits which would reasonably be expected to have been derived by it, if it were an independent enterprise engaged in the same or similar activities under the same or similar conditions. 　　3. In determining the business profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including a reasonable allocation of executive and general administrative expenses, research and development expenses, interest, and other expenses incurred for the purposes of the enterprise as a whole (or the part thereof which includes the permanent establishment), whether incurred in the State in which the permanent establishment is situated or elsewhere. 　　4. No business profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 　　5. Insofar as it has been customary in a Contracting State to determine the business profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the business profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article. 　　6. For the purposes of the preceding paragraphs, the business profits to be attributed to a permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 　　7. Where business profits include items of income which are dealt with separately in other Articles of this Agreement, then, the provisions of those Articles shall not be affected by the provisions of this Article, unless otherwise expressly provided by those Articles. 　　8. For the purposes of this Convention, the term "business profits" means income derived from any trade or business, including the rental of tangible personal property. Article 8 Shipping and Air Transport 　　1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State. 　　2. For the purposes of this Article, profits from the operation of ships or aircraft in international traffic include profits derived from the rental of ships or aircraft if such ships or aircraft are operated in international traffic by the lessee or if such rental profits are incidental to other profits described in paragraph 1. 　　3. Profits of an enterprise of a Contracting State from the use, maintenance, or rental of containers (including trailers, barges, and related equipment for the transport of containers) used in international traffic shall be taxable only in that State. 　　4. The provisions of paragraphs 1 and 3 shall also apply to profits from participation in a pool, a joint business, or an international operating agency. ARTICLE 9 Associated Enterprises 　　1. Where 　　a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or 　　b) the same persons participate directly or indirectly in the management, control, or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which, but for those conditions would have accrued to one of the enterprises, but by reason of those conditions have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 　　2. Where a Contracting State includes in the profits of an enterprise of that State, and taxes accordingly, profits on which an enterprise of the other Contracting State has been charged to tax in that other State, and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be paid to the other provisions of this Convention and the competent authorities of the　Contracting States shall if necessary consult each other. 　　3. The provisions of paragraph 1 shall not limit any provisions of the law of either Contracting State which permit the distribution, apportionment, or allocation of income, deductions, credits, or allowances between persons, whether or not residents of a Contracting State, owned or controlled directly or indirectly by the same interests when necessary in order to prevent evasion of taxes or clearly to reflect the income of any of such persons. ARTICLE 10 Dividends 　　1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 　　2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed a) 5 percent of the gross amount of the dividends if the beneficial owner is a company which owns at least 10 percent of the voting stock of the company paying the dividends; 　　b) 15 percent of the gross amount of the dividends in all other cases. 　　This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 　　3. The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. 　　4. The provisions of paragraph 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State, or which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a regular base situated therein, and the dividends are attributable to such permanent establishment or regular base. In such case the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply. 　　5. The income of a Barbados company derived from the manufacture in Barbados of approved products under the fiscal incentives legislation of Barbados (as in effect on the date of signature of the Convention or as the Competent Authorities may agree pursuant to Article 25 (Mutual Agreement Procedure)) shall not be subject to the United States accumulated earnings tax. In addition, a company which is a resident of Barbados shall be exempt from United States accumulated earnings tax if individuals (other than United States citizens) who are residents of Barbados control directly or indirectly throughout the last half of the taxable year more than 50 percent of the entire voting power of the company. 　　6. A Contracting State may not impose any tax on dividends paid by a company which is not a resident of that State, except insofar as: 　　a) the dividends are paid to a resident of that State, 　　b) the dividends are attributable to a permanent establishment or a regular base situated in that State; or 　　c) the dividends are paid out of profits attributable to one or more permanent establishments of such company in that State, provided that the gross income of the company attributable to such permanent establishment constituted at least 50 percent of the company's gross income from all sources. 　　Where subparagraph c) applies and subparagraphs a) and b) do not apply, the tax shall be subject to the limitations of paragraph 2. ARTICLE 11 Interest 　　1. Where interest is derived from sources within a Contracting State and beneficially owned by a resident of the other Contracting State, the rate of tax imposed thereon in the first-mentioned State shall not exceed 12.5 percent of the gross amount of the interest. Notwithstanding the preceding sentence, interest derived from sources within a Contracting State, beneficially owned by a resident of the other Contracting State, and paid in respect of a bond, debenture or other similar obligation issued, guaranteed or insured by the government of that Contracting State or by a political subdivision, local authority or instrumentality thereof shall be taxable only in that other State. 　　2. The term "interest" as used in the Convention means income from loans of every kind whether or not secured by mortgage, and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities, and income from bonds or debentures, including premiums or prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purposes of this Convention. 　　3. The provisions of paragraph 1 shall not apply if the recipient of the interest, being a resident of a Contracting State, carries on in the other Contracting State in which the interest arises a business through a permanent establishment situated therein, or performs in that other State independent personal services from a regular base situated therein, and the indebtedness in respect of which the interest is paid is effectively connected with that permanent establishment or regular base. In such a case, the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services) as the case may be, shall apply. 　　4. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest, having regard to the indebtedness on which it is paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement.