ARTICLE 21 　　 Social Security Payments 　　Social security payments and other public pensions paid by one of the Contracting States to an individual who is a resident of the other Contracting State shall be exempt from tax in both Contracting States. This Article shall not apply to payments described in Article 22 (Governmental Functions). ARTICLE 22 Governmental Functions 　　Wages, salaries, and similar remuneration, including pensions, annuities, or similar benefits, paid from public funds of one of the Contracting States: 　　(a) To a citizen of that Contracting State, or 　　(b) To a citizen of a State other than a Contracting State who comes to the other Contracting State expressly for the purpose of being employed by the first-mentioned Contracting State,for labor or personal services performed as an employee of the national Government of that Contracting State, or any agency thereof, in the discharge of functions of a governmental nature shall be exempt from tax by the other Contracting State. ARTICLE 23 Teachers 　　1. Where a resident of one of the Contracting States is invited by the Government of the other Contracting State, a political subdivision, or a local authority thereof, or by a university or other recognized educational institution in that other Contracting State to come to that other Contracting State for a period not expected to exceed 2 years for the purpose of teaching or engaging in research, or both, at a university or other recognized educational institution and such resident comes to that other Contracting State primarily for such purpose, his income from personal services for teaching or research at such university or educational institution shall be exempt from tax by that other Contracting State for a period not exceeding 2 years from the date of his arrival in that other Contracting State. 　　2. This Article shall not apply to income from research if such research is undertaken not in the public interest but primarily for the private benefit of a specific person or persons. ARTICLE 24 Students and Trainees 　　1. (a) An individual who is a resident of one of the Contracting States at the time he becomes temporarily present in the other Contracting State and who is temporarily present in that other Contracting State for the primary purpose of- 　　(i) Studying at a university or other recognized educational institution in that other Contracting State, or 　　(ii) Securing training required to qualify him to practice a profession or professional specialty, or 　　(iii) Studying or doing research as a recipient of a grant, allowance, or award from a governmental, religious, charitable, scientific, literary, or educational organization,shall be exempt from tax by that other Contracting State with respect to amounts described in subparagraph (b) for a period not exceeding 5 taxable years from the date of his arrival in that other Contracting State. 　　(b) The amounts referred to in subparagraph (a) are- 　　(i) Gifts from abroad for the purpose of his maintenance, education, study, research, or training; 　　(ii) The grant, allowance, or award; and 　　(iii) Income from personal services performed in that other Contracting State in an amount not in excess of 3,000 United States dollars or its equivalent in Israeli pounds for any taxable year. 　　2. An individual who is a resident of one of the Contracting States at the time he becomes temporarily present in the other Contracting State and who is temporarily present in that other Contracting State as an employee of, or under contract with, a resident of the first-mentioned Contracting; State, for the primary purpose of- 　　(a) Acquiring technical, professional, or business experience from a person other than that resident of the first-mentioned Contracting State or other than a person related to such resident, or 　　(b) Studying at a university or other recognized educational institution in that other Contracting State, shall be exempt from tax by that other Contracting State for a period not exceeding 12 consecutive months with respect to his income from personal services in an aggregate amount not in excess of 7,500 United States dollars or its equivalent in Israeli pounds. 　　3. An individual who is a resident of one of the Contracting States at the time he becomes temporarily present in the other Contracting State and who is temporarily present in that other Contracting State for a period not exceeding 1 year, as a participant in a program sponsored by the Government of that other Contracting State, for the primary purpose of training, research, or study, shall be exempt from tax by that other Contracting State with respect to his income from personal services in respect of such training, research, or study performed in that other Contracting State in an aggregate amount not in excess of 10,000 United States dollars or its equivalent in Israeli pounds. 　　4. The benefits provided under Article 23 (Teachers) and paragraph (1) of this Article shall, when taken together, extend only for such period of time, not to exceed 5 taxable years from the date of arrival of the individual claiming such benefits, as may reasonably or customarily be required to effectuate the purpose of the visit. The benefits provided under Article 23 (Teachers) shall not be available to an individual if, during the immediately preceding period, such individual enjoyed the benefits of paragraph (1) of this Article. ARTICLE 25 Investment or Holding Companies 　　A corporation of one of the Contracting States deriving dividends, interest, royalties or capital gains from sources within the other Contracting State shall not be entitled to the benefits of Articles 12 (Dividends), 13 (Interest), 14 (Royalties) or 15 (Capital Gains) if- 　　(a) By reason of special measures the tax imposed on such corporation by the firstmentioned Contracting State with respect to such dividends, interest, royalties or capital gains is substantially less than the tax generally imposed by such Contracting State on corporate profits, and 　　(b) 25 percent or more of the capital of such corporation is held of record or is otherwise determined, after consultation between the competent authorities of the Contracting States, to be owned, directly or indirectly, by one or more persons who are not individual resident of the first-mentioned Contracting State (or, in the case of an Israeli corporation, who are citizens of the United States). ARTICLE 26 Relief from Double Taxation 　　Double taxation of income shall be avoided in the following manner: 　　1. In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended front time to time without changing the general principle hereof), the United States shall allow to a citizen or resident of the United States as a credit against the United States tax the appropriate amount of taxes paid or accrued to Israel and, in the case of a United States corporation owing at least 10 percent of the voting stock of an Israeli corporation from which it receives dividends in any taxable year, shall also allow credit for the appropriate amount of taxes paid or accrued to Israel by the Israeli corporation paying such dividends with respect to the profits out of which such dividends are paid. Such appropriate amount shall be based upon the amount of tax paid or accrued to Israel, but the credit shall not exceed the limitations (for the purpose of limiting the credit to the United States tax on income from sources within Israel or on income from sources outside of the United States) provided by United States law for the taxable year. For the purpose of applying the United States credit in relation to taxes paid or accrued to Israel, the rules set forth in Article 4 (Source of Income) shall be applied to determine the source of income. For purposes of applying the United States credit in relation to taxes paid or accrued to Israel, the taxes referred to in paragraphs (1) (b) and (2) of Article 1 (Taxes Covered) shall be considered to be income taxes. 　　2. If for any taxable year a citizen or resident of the United States takes as a credit against tax under paragraph (1) an amount with respect to a compulsory loan to Israel (which is included as a tax under paragraph (1) (b) (v) of Article 1 (Taxes Covered)), then- 　　(i) Any interest received on such loan shall not be included in taxable income for purposes of United States income tax and no deduction shall be allowed for any interest assessed or collected to which clause (iv) applies; 　　(ii) Upon repayment or recoupment of the principal of the loan, the amount of the value in United States dollars received shall be treated as a refund for the year the loan was made of taxes paid to Israel for such year equal to the basis for such loan; 　　(iii) Any such amount in excess of such basis shall be included in taxable income for purposes of United States tax for the year the repayment or recoupment is made; and 　　(iv) No interest shall be assessed or collected by the United States on any amount of tax due for the year the loan was made except to the extent that interest referred to in clause (i) was received. 　　The Secretary of the Treasury or his delegate shall prescribe regulations he deems necessary to carry out the purposes of this paragraph including rules for determining whether all amount included as a tax under paragraph (1) (b) (v) of Article 1 (Taxes Covered) has been taken as a credit against tax. 　　3. Israel shall allow to a resident of Israel as a credit against Israeli tax the appropriate amount of income taxes paid or accrued to the United States and, in the case of an Israeli corporation owning at least 10 percent of the voting stock of a United States corporation from which it receives dividends in any taxable year, shall also allow credit for the appropriate amount of taxes paid or accrued to the United States by the United States corporation paying such dividends with respect to the profits out of which such dividends are paid. Such appropriate amount shall be based upon the amount of tax paid or accrued to the United States but shall not exceed that portion of Israeli tax which such resident's net income from sources within the United States bears to his entire net income for the same taxable year. 　　For the purpose of applying the Israeli credit in relation to taxes paid or accrued to the United States, the rules set forth in Article 4 (Source of Income) shall be applied to determine the source of income. For purposes of applying the Israeli credit in relation to taxes paid or accrued to the United States, the taxes referred to in paragraphs (1) (a) and (2) of Article 1 (Taxes Covered) shall be considered to be creditable taxes. ARTICLE 27 Non-discrimination 　　1. A citizen of one of the Contracting States, who is a resident of the other Contracting State shall not be subject in that other Contracting State to more burdensome taxes than a citizen of that other Contracting State who is a resident thereof. 　　2. A permanent establishment which a resident of one of the Contracting States has in the other Contracting State shall not be subject in that other Contracting State to more burdensome taxes than a resident of that other Contracting State carrying on the same activities. This paragraph shall not be construed as obliging a Contracting State to grant to individual residents of the other Contracting State any personal allowances, reliefs, or deductions for taxation purposes on account of civil status or family responsibilities which it grants to its own individual residents. 　　3. A corporation of one of the Contracting States, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirements connected with taxation which is other or more burdensome than the taxation and requirements to which a corporation of the first-mentioned Contracting State carrying on the same activities, the capital of which is wholly owned or controlled by one or more residents of the first-mentioned Contracting State, is or may be subjected. ARTICLE 28 Mutual Agreement Procedure 　　1. Where a resident or citizen of one of the Contracting States considers that the action of one or both of the Contracting States results or will result for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the national laws of the Contracting States, present his case to the competent authority of the Contracting State of which he is a resident or citizen. Should the resident's or citizen's claim be considered to have merit by the competent authority of the Contracting State to which the claim is made, it shall endeavor to come to an agreement with the competent authority of the other Contracting State with a view to the avoidance of taxation not in accordance with the provisions of this Convention. 　　2. The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulties or doubts arising as to the application of this Convention. In particular, the competent authorities of the Contracting States may agree- 　　(a) To the same attribution of industrial or commercial profits to a resident of one of the Contracting States and its permanent establishment situated in the other Contracting State; 　　(b) To the same allocation of income, deductions, credits, or allowances between a resident of one of the Contracting States and any related person and to the readjustment of taxes imposed by each Contracting State to reflect such allocation; 　　(c) To the same determination of the source of particular items of income; or 　　(d) To the same characterization of particular items of income. 　　3. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of this Article. When it seems advisable for the purpose of reaching agreement, the competent authorities may meet together for an oral exchange of opinions. 　　4. In the event that the competent authorities reach such an agreement, taxes shall be imposed on such income, and refund or credit of taxes shall be allowed, by the Contracting States in accordance with such agreement, notwithstanding any procedural rule (including statutes of limitations) applicable under the law of either Contracting State. ARTICLE 29 Exchange of Information 　　1. The competent authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Convention and of the domestic laws of the Contracting States concerning taxes covered by this Convention insofar as the taxation thereunder is in accordance with this Convention. Any information so exchanged shall be treated as secret and shall not be disclosed to any persons or authorities other than those concerned with the assessment, including judicial determination, or collection of the taxes which are the subject of the Convention. 　　2. In no case shall the provisions of paragraph (1) be construed so as to impose on one of the Contracting States the obligation- 　　(a) To carry out administrative measures at variance with the laws or the administrative practice of that or of the other Contracting State; 　　(b) To supply particulars which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; 　　(c) To supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would he contrary to public policy. ARTICLE 30 Diplomatic and Consular Officers 　　Nothing in this Convention shall affect the fiscal privileges of diplomatic and consular officials under the general rules of international law or under the provisions of special agreements. ARTICLE 31 Entry into Force 　　This Convention shall be subject to ratification in accordance with the constitutional procedures of each Contracting State and instruments of ratification shall be exchanged as soon as possible. It shall enter into force 30 days after the date of exchange of instruments of ratification and shall then have effect for the first time: 　　(a) As respects the rate of withholding of tax, to amounts paid on or after the first day of the second month following the date on which this Convention enters into force. 　　(b) As respects other taxes, to taxable years beginning on or after January 1 of the year following the date on which this Convention enters into force. ARTICLE 32 Termination 　　1. This Convention shall remain in force until terminated by one the Contracting States. Either Contracting State may terminate the Convention at any time after 5 years from the date on which this Convention enters into force provided that at least 6 months' prior notice of termination has been given through diplomatic channels. In such event, the Convention shall cease to have force and effect as respects income of calendar years or taxable years beginning (or, in the case of taxes payable at the source, payments made) on or after April 1 next following the expiration of the 6-month period. 　　2. Notwithstanding the provisions of paragraph (1), and upon prior notice to be given through diplomatic channels, the provisions of this Convention exempting social security payments from taxation in the Contracting State which makes the payments may be terminated by either Contracting State at any time after this Convention enters into force. 　　DONE at Washington, in duplicate, in the English and Hebrew languages, the two texts having equal authenticity, this twentieth day of November, 1975. For the Government of the United States of America: WILLIAM E. SIMON. For the Government of the State of Israel: SIMCHA DINITZ.