THE EMBASSY OF THE UNITED STATE. OF AMERICA KINGSTON, MAY 21, 1980 No.141. 　　Excellency: I have the honor of commenting on the Convention between the Government of the United States of America and the Government of Jamaica for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income, signed today. 　　The following understandings were reached between the two governments. 　　(1) In the process of negotiating this agreement, the delegation from Jamaica emphasized the necessity of including in the Convention additional provisions which will create incentives to promote the flow of investment to Jamaica. 　　The United States delegation is not able to accept such provisions at this time. However, I wish to assure you that my Government realizes the importance your Government attaches to the increase of investments in Jamaica. Should circumstances change, including any changes in the manner in which the United States imposes income tax upon the income of United States investments in Jamaica, our Government would be prepared to reopen the discussions in order to reflect in this Convention provisions which would minimize the conflicts between the United States tax system and the incentives proposed by the Government of Jamaica to foreign investors and which are consistent with the income tax policies of the United States, including tax Convention policies, with respect to other developing countries. 　　(2) In the course of discussions leading to the conclusion of the Convention signed today, the Jamaican delegation expressed its desire that Article 24 (Non-Discrimination) be drafted so as not to prevent Jamaica from imposing special taxes in pursuance of its economic development program, even if these taxes might otherwise violate the provisions of Article 24. The United States delegation explained that it could not agree to such a provision before having the opportunity to examine the specific aspects of such legislation. The United States delegation believes, furthermore, that it would be inappropriate to grant to the competent authorities the power to expand in this way the scope of the Convention by administrative action. 　　I would like to take this opportunity to assure you, however, that if at some time in the future Jamaica should enact legislation which would contravene the provisions of Article 24 of the Convention, the United States would be prepared to reopen discussions with the Government of Jamaica to determine whether it would be appropriate to except such legislation from the scope of Article 24. 　　(3) During discussions involving the Convention, representatives of the Government of Jamaica expressed their concern about whether certain amounts received by the Government of Jamaica from companies extracting and refining bauxite in Jamaica would qualify for the United States foreign tax credit. The Government of Jamaica expressed the belief that such amounts are in satisfaction of liability for the Jamaican company profits tax. The Government of Jamaica also expressed a willingness to consider a revision of its taxation of bauxite income to impose a tax "in lieu of" its company profits tax within the meaning of section 903 of the United States Internal Revenue Code. The Government of Jamaica desired assurance that such an "in lieu of" tax would be covered by the Convention. 　　The United States delegation discussed with the delegation of the Government of Jamaica the foreign tax credit requirements of sections 901 and 903 of the Internal Revenue Code. The United States delegation agreed that the language now included in paragraph 3 of Article 2 (Taxes Covered) of the Convention covers amounts paid "in lieu of" the company profits tax (or income tax) of Jamaica, if the Government of Jamaica decides to impose such a tax in the future. 　　It is understood that such an "in lieu of" tax would have to meet the requirements of section 903 of the Internal Revenue Code of 1954 to be covered by the Convention. 　　Accept, Excellency, the renewed assurances of my highest consideration. 　　　　　　　　　　　　　　　　　　　　　　　　(s) Loren E. Lawrence 　　　　　　　　　　　　　　　　　　　　　MINISTRY OF FINANCE AND PLANNING 　　　　　　　　　　　　　　　　　　　　　　　　30 NATIONAL HEROES CIRCLE 　　　　　　　　　　　　　　　　　　　　　　　　P.O. BOX 512 　　　　　　　　　　　　　　　　　　　　　　　　KINGSTON, 　　　　　　　　　　　　　　　　　　　　　　　　JAMAICA NO 714/09 　　　　　　　　　　　　　　　　　　　　　　　　21st May, 1980. His Excellency Loren Lawrence, Ambassador of the United States of America. Excellency: 　　I have the honor to acknowledge receipt of your note of May 21, 1980 which reads as follows: 　　"I have the honor of commenting on the Convention between the Government of the United States of America and the Government of Jamaica for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income, signed today. The following understandings were reached between the two governments. 　　(1) In the process of negotiating this agreement, the delegation from Jamaica emphasized the necessity of including in the Convention additional provisions which will create incentives to promote the flow of investment to Jamaica. 　　The United States delegation is not able to accept such provisions at this time. However, I wish to assure you that my Government realizes the importance your Government attaches to the increase of investments in Jamaica. Should circumstances change, including any changes in the manner in which the United States imposes income tax upon the income of United States investments in Jamaica, our Government would be prepared to reopen the discussions in order to reflect in this Convention provisions which would minimize the conflicts between the United States tax system and the incentives proposed by the Government of Jamaica to foreign investors and which are consistent with the income tax policies of the United States, including tax Convention policies, with respect to other developing countries. 　　(2) In the course of discussions leading to the conclusion of the Convention signed today, the Jamaican delegation expressed its desire that Article 24 (Non-Discrimination) be drafted so as not to prevent Jamaica from imposing special taxes in pursuance of its economic development program, even if these taxes might otherwise violate the provisions of Article 24. The United States delegation explained that it could not agree to such a provision before having the opportunity to examine the specific aspects of such legislation. The United States delegation believes, furthermore, that it would be inappropriate to grant to the competent authorities the power to expand in this way the scope of the Convention by administrative action. 　　I would like to take this opportunity to assure you, however, that if at some time in the future Jamaica should enact legislation which would contravene the provisions of Article 24 of the Convention, the United States would be prepared to reopen discussions with the Government of Jamaica to determine whether it would be appropriate to except such legislation from the scope of Article 24. 　　(3) During discussions involving the Convention, representatives of the Government of Jamaica expressed their concern about whether certain amounts received by the Government of Jamaica from companies extracting and refining bauxite in Jamaica would qualify for the United States foreign tax credit. The Government of Jamaica expressed the belief that such amounts are in satisfaction of liability for the Jamaican company profits tax. The Government of Jamaica also expressed a willingness to consider a revision of its taxation of bauxite income to impose a tax "in lieu of" its company profits tax within the meaning of section 903 of the United States Internal Revenue Code. The Government of Jamaica desired assurance that such an "in lieu of" tax would be covered by the Convention. 　　The United States delegation discussed with the delegation of the Government of Jamaica the foreign tax credit requirements of sections 901 and 903 of the Internal Revenue Code. The United States delegation agreed that the language now included in paragraph 3 of Article 2 (Taxes Covered) of the Convention covers amounts paid "in lieu of" the company profits tax (or income tax) of Jamaica, if the Government of Jamaica decides to impose such a tax in the future. It is understood that such an "in lieu of" tax would have to meet the requirements of section 903 of the Internal Revenue Code of 1954 to be covered by the Convention. 　　Accept, Excellency, the renewed assurances of my highest consideration." 　　I have the honor to confirm that the foregoing understandings are in accord with the view of the Jamaican Government and are approved by it. 　　Accept, Excellency, the renewed assurances of my highest consideration 　　　　　　　　　　　　　　　　　　　　　　(s) Hugh Small 　　　　　　　　　　　　　　　　　　　　　 Minister of Finance & Planning.