NOTES OF EXCHANGE TO THE CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE REPUBLIC OF FINLAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL EMBASSY OF THE UNITED STATES OF AMERICA No. 168 Helsinki, September 21, 1989 Ulla Puolanne Minister Ministry of Finance Helsinki 　　EXCELLENCY: I have the honor to refer to the Convention between the Government of the United States of America and the Government of the Republic of Finland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital (the "Convention"), which was signed today. The following understandings were reached between our two Governments. 　　1. For purposes of the communal tax of Finland referred to in subparagraph (a)(ii) of paragraph 1 of Article 2 (Taxes Covered) of the Convention, the business profits of an enterprise of the United States that are attributable in the aggregate to one or more permanent establishments of such enterprise in Finland ("Aggregate Finnish Profits"), shall be determined in accordance with the provisions of Article 7 (Business Profits) of the Convention. However, where such an enterprise has more than one permanent establishment in Finland, Article 7 (Business Profits) of the Convention shall not preclude Finland from determining the portion of the enterprises's aggregate Finnish profits as may be customary for that purpose in Finland. The method of apportionment so adopted, however, shall be such that the result is in accordance with the principles of Article 7. 　　2. In the event the United States should enact a tax on capital that is comparable to the state capital tax of Finland referred to in subparagraph (a)(i) of paragraph 1 of Article 2 (Taxes Covered) of the Convention, the United States shall, without undue delay, enter into negotiations with Finland with a view to amending the Convention to include such tax within subparagraph (b) of paragraph 1 of Article 2 and to provide appropriate relief from double taxation of capital. 　　3. It is intended that procedures will be developed by the United States to ensure that the limitation of the last sentence of subparagraph (b) of paragraph 1 of Article 2 (Taxes Covered) of the Convention will be applied without undue administrative burden. 　　I have the honor to propose that the present Note and your reply thereto shall constitute an agreement between our two Governments on these matters. 　　Accept, Excellency the renewed assurances of my highest consideration. 　　　　　　　　　　　　　　　　　　　　　　　　　(s) Michael L. Durkee 　　　　　　　　　　　　　　　　　　　　　　　　　　Charge d'Affaires a.i. 　　　　　　　　　　　　　　　　　　　　　　　Helsinki, 21 September 1989 Mr. Michael L. Durkee Charge d'Affaires a.i. The Embassy of the United States Helsinki Sir, 　　I have the honour to acknowledge receipt of Your Note of 21 September 1989, which reads as follows: 　　"I have the honor to refer to the Convention between the Government of the United States of America and the Government of the Republic of Finland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital (the "Convention"), which was signed today. The following understandings were reached between our two governments: 　　1. For purposes of the Communal tax of Finland referred to in subparagraph (a)(ii) of paragraph 1 of Article 2 (Taxes Cowered) of the Convention, the business profits of an enterprise of the United States that are attributable in the aggregate to one or more permanent establishments of such enterprise in Finland ("Aggregate Finnish Profits"), shall be determined in accordance with the provisions of Article 7 (Business Profits) of the Convention. However, where such an enterprise has more than one permanent establishment in Finland, Article 7 (Business Profits) of the Convention shall not preclude Finland from determining the portion of the enterprises's aggregate Finnish profits as may be customary for that purpose in Finland. The method of apportionment so adopted, however, shall be such that the result is in accordance with the principles of Article 7. 　　2. In the event the United States should enact a tax on capital that is comparable to the state capital tax of Finland referred to In subparagraph (a) (i) of paragraph 1 of Article 2 (Taxes Covered) of the Convention, the United States shall, without undue delay, enter into negotiations with Finland with a view to amending the Convention to include such tax within subparagraph (b) of paragraph 1 of Article 2 and to provide appropriate relief from double taxation of capital. 　　3. It is intended that procedures will be developed by the United States to ensure that the limitation of the last sentence of subparagraph (b) of paragraph 1 of Article 2 (Taxes Covered) of the convention will be applied without undue administrative burden. 　　I have the honor to propose that the present Note and your reply thereto shall constitute an agreement between our two Governments on these matters. Accept, Excellency, the renewed assurances of my highest consideration." In reply, I have the honour to inform you that the foregoing understandings are acceptable to the Government of Finland, who therefore agree that Your Note and the present reply shall constitute an agreement between our two Governments on these matters. Accept, Sir, the renewed assurances of my highest consideration. (s) Ulla Puolanne Minister in the Ministry of Finance