PROTOCOL, WITH EXCHANGE OF NOTES, BETWEEN THE UNITED STATES OF AMERICA AND JAMAICA AMENDING THE CONVENTION OF MAY 21, 1980 SIGNED AT KINGSTON JULY 17, 1981 　　Protocol, with Exchange of Notes, Amending the Convention of May 21, 1980. 　　Signed at Kingston July 17, 1981; 　　Transmitted by the President of the United States of America to the Senate September 8,1981 (Treaty Doc. No.97-17, 97th Cong., 1st Sess.); 　　Reported Favorably by the Senate Committee on Foreign Relations December 9, 1981 (5. Ex. Rept. No.97-40, 97th Cong., 1st Sess.); 　　Advice and Consent to Ratification by the Senate, with a Reservation and an Understanding to the Convention, December 16, 1981; 　　Ratified by the President, Subject to Said Reservation and Understanding to the Convention, December 22, 1981; 　　Ratified by Jamaica December 29, 1981; 　　Ratifications Exchanged at Kingston December 29, 1981; 　　Proclaimed by the President January 20, 1982; 　　Entered into Force December 29, 1981. 　　　　　　　　　　LETTER OF SUBMITTAL (PROTOCOL) 　　　　　　　　　　　　　　　　　　　　　　　DEPARTMENT OF STATE, 　　　　　　　　　　　　　　　　　　　　　　　Washington, August 18, 1981. The PRESIDENT, The White House. 　　THE PRESIDENT: I have the honor to submit to you, with a view to its transmission to the Senate for advice and consent to ratification, the Protocol amending 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, together with a related exchange of notes, signed at Kingston on July 17, 1981. 　　The Protocol was negotiated subsequent to Prime Minister Seaga's visit to Washington in January, 1981, and reflects the understandings reached between you and the Prime Minister. 　　A central feature of the Protocol, (Article IV), adds a new provision to Article 25 of the Convention (Non-Discrimination), to permit United States citizens to deduct expenses incurred while attending business conventions in Jamaica. Under the Protocol, expenses for any business convention held in Jamaica, if they are ordinary and necessary business expenses, will be deductible in the same way as if the convention were held in the United States. 　　Two provisions of the Protocol (Articles I and III) are designed to limit potential abuse of the Convention by denying treaty benefits in certain situations where benefits are not intended. Article I amends paragraph 3 of Article l of the Convention (Personal Scope), by providing that a former United States citizen who gives up his citizenship principally for tax avoidance purposes and resides in Jamaica will not be entitled to United States benefits under the Convention. Article III replaces Article 17 of the Convention and has as its purpose the denial of treaty benefits to residents of third countries who establish a corporation or other entity in one of the Contracting States for the principal purpose of obtaining treaty benefits from the other Contracting State.Although this was also the intent of Article 17 of the Convention as signed, the substitute language provided by Article III of the Protocol, makes the application of that provision more effective and less limited than the original. 　　The exchange of notes confirms understandings reached by the two Governments with respect to Article 17 of the Protocol, to ensure that its provisions are not used to impede bona fide investment in Jamaica by residents of third countries. In addition, the exchange of notes refers to past and present cooperation between the two countries on legal assistance in criminal matters, including fiscal crimes, and confirms their willingness to negotiate new treaties on extradition and mutual assistance on criminal matters. 　　The Protocol will enter into force upon the exchange of instruments of ratification and will have effect in accordance with the provisions of Article 28 of the Convention. 　　A technical memorandum explaining in detail the provisions of the Convention and the Protocol is being prepared by the Department of the Treasury and will be submitted to the Senate Committee on Foreign Relations. 　　The Department of the Treasury, with the cooperation of the Department of State, was primarily responsible for the negotiation of the Protocol. It has the approval of both Departments. Respectfully submitted, WILLIAM CLARK, Acting Secretary of State. LETTER OF TRANSMITTAL (PROTOCOL) THE WHITE HOUSE, September 8, 1981. To the Senate of the United States: 　　I transmit herewith, for the advice and consent of the Senate to ratification, the Protocol amending 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, together with a related exchange of notes, signed at Kingston on July 17,1981. I also transmit the report of the Department of State with respect to the Protocol. The Protocol was negotiated subsequent to Prime Minister Seaga's visit to this country in January, 1981. It strengthens the provisions of the Convention in order to limit potential abuse of the treaty in certain situations and to make more effective the means of denying treaty benefits to residents of third countries who establish a corporation in one Contracting State in order to obtain treaty benefits from the other Contracting State. The Protocol also permits United States citizens to deduct expenses incurred while attending business conventions in Jamaica. 　　I recommend that the Senate give early and favorable consideration to the Protocol and Convention and give its advice and consent to ratification. RONALD REAGAN. BY THE PRESIDENT OF THE UNITED STATES OF AMERICA A PROCLAMATION CONSIDERING THAT: 　　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 was signed at Kingston on May 21, 1980, together with a related exchange of notes, and the Protocol Amending the 1980 Convention, together with a related exchange of notes, was signed at Kingston on July 17, 1981, the texts of which are hereto annexed; 　　The Senate of the United States of America by its resolution of December 16, 1981, twothirds of the Senators present concurring therein, gave its advice and consent to ratification of the Convention, Amending Protocol and related exchanges of notes, subject to the following: 　　1) reservation that, notwithstanding the provisions of paragraph (5) of Article 13 of the Convention (which relates to the taxation of gains from the alienation of shares of a corporation or of an interest in a partnership, estate, or trust, the property of which consists, directly or indirectly, principally of real property situated in one of the countries), gain derived by a resident of a Contracting State from the alienation or other disposition of an interest in a corporation, or an interest in a partnership, trust, or estate, which has an interest in real property located in the other Contracting State, or the assets of which are considered under the domestic law of that other Contracting State to consist, in whole or in part, of real property, or an interest therein, in that other State, may be taxed by that other State to the extent provided for by its domestic law.In addition, gain derived by a corporation which is a resident of a Contracting State upon the distribution (including a distribution in liquidation or otherwise) of an interest in real property in the other Contracting State (as determined under the domestic law of the other Contracting State) may be taxed by that other Contracting State to the extent provided for by its domestic law 　　2) understanding that appropriate Congressional Committees and the General Accounting Office shall be afforded access to the information exchanged under this Convention where such access is necessary to carry out their oversight responsibilities, subject only to the limitations and procedures of the Internal Revenue Code. 　　The Convention, Amending Protocol and related exchanges of notes were ratified, subject to the aforesaid reservation and understanding by the President of the United States of America on December 22, 1981, in pursuance of the advice and consent of the Senate, and was ratified on the part of the Government of Jamaica; 　　The instruments of ratification of the Convention, Amending Protocol and related exchanges of notes were exchanged at Kingston on December 29, 1981, and accordingly the Convention and Amending Protocol entered into force on December 29, 1981, effective as specified in Article 29 of the Convention; 　　NOW, THEREFORE, I, Ronald Reagan, President of the United States of America, proclaim and make public the Convention, Amending Protocol and related exchanges of notes to the end that they be observed and fulfilled with good faith on and after December 29, 1981, by the United States of America and by the citizens of the United States of America and all other persons subject to the jurisdiction thereof. 　　IN TESTIMONY WHEREOF, I have signed this proclamation and caused the Seal of the United States of America to be affixed 　　DONE at the city of Washington this twentieth day of January in the year of our Lord one thousand nine hundred eighty-two and of the Independence of the United States of America the two hundred sixth. By the President: RONALD REAGAN ALEXANDER M. HAIG, JR. Secretary of State 　　PROTOCOL, AMENDING 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 AT KINGSTON ON MAY 21, l980 　　The Government of the United States of America and the Government of Jamaica, Desiring to conclude a Protocol to amend the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, signed at Kingston on May 21,1980, 　　Have agreed as follows: 　　　　　　　　　　　　　ARTICLE I 　　Paragraph 3 of Article I (Personal Scope) of the Convention shall be deleted and replaced by the following: 　　"3. Notwithstanding any provisions of this Convention except paragraph 4 of this Article, a Contracting State may tax its residents (as determined under Article 4 (Residence)), and by reason of citizenship may tax its citizens, as if this Convention had not come into effect. In the case of the United States, the term "citizen" shall include a former citizen whose loss of citizenship had as one of its principal purposes the avoidance of income tax, but only for a period of 10 years following such loss." ARTICLE II 　　Paragraph 2(a) of Article 10 (Dividends) of the Convention shall be deleted and replaced by the following: 　　"(a) 10 percent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which owns, directly or indirectly, at least 10 percent of the voting stock of the company paying the dividends;" ARTICLE III 　　Article 17 (Investment or Holding Companies) of the Convention shall be deleted and replaced by the following: "ARTICLE 17 LIMITATIONS ON BENEFITS 　　1. A person (other than an individual) which is a resident of a Contracting State shall not be entitled under this Convention to relief from taxation in the other Contracting State unless 　　(a) more than 75 percent of the beneficial interest in such person is owned, directly or indirectly, by one or more individual residents of the first-mentioned Contracting State; and 　　(b) the income of such person is not used in substantial part, directly or indirectly,to meet liabilities (including liabilities for interest or royalties) to persons who are residents of a State other than a Contracting State, other than any such persons who are individuals subject to tax in a Contracting State on their worldwide income by reason of citizenship. 　　A company that has substantial trading in its stock on a recognized exchange in a Contracting State is presumed solely for purposes of subparagraph (a), to be owned by individual residents of the Contracting State in which the company is resident, as determined under Article 4 (Residence). 　　2. Paragraph 1 shall not apply if it is determined that the acquisition, ownership or maintenance of such person and the conduct of its operations did not have as a principal purpose obtaining benefits under this Convention. 　　3: The requirements of paragraph 2 are satisfied, in particular, where a company resident in Jamaica and owned by individual residents of third States derives income with respect to which the company claims United States tax benefits under this Convention, the company does not use such income in the manner described in paragraph 1(b) and: 　　(a) the company is engaged in business operations in Jamaica and the income with respect to which the company claims United States tax benefits is incidental to or derived in connection with the business operations in Jamaica; or 　　(b) the individuals owning the company are residents of countries that have income tax conventions in force with the United States and, pursuant to such conventions, the individuals would have been entitled to United States tax benefits the same as, or substantially similar to, the United States tax benefits claimed by the company under this Convention, had the individuals earned the income directly. 　　The provisions of this paragraph shall apply, mutatis mutandis, to a company resident in the United States and owned by residents of third States that derives income with respect to which Jamaican tax benefits are claimed under this Convention." 　　　　　　　　　　　　　ARTICLE IV 　　There shall be added to Article 25 (Non-Discrimination) of the Convention a new paragraph 7, as follows: 　　"7. Expenses incurred by a citizen or resident of the United States in connection with attendance at a convention, seminar or similar meeting held in Jamaica shall be deductible for the purposes of taxation in the United States to the same extent as if the convention, seminar or similar meeting were held in the United States. This paragraph applies only to ordinary and necessary business expenses for: 　　(a) lodging, meals and the personal sustenance and comfort of the traveler while at the convention; 　　(b) registration at the convention and books and other similar materials necessary for attendance at the convention; and 　　(c) ground and air transportation to and from the convention site, but not in excess of the amount deductible under the laws of the United States with respect to transportation expenses incurred in connection with travel outside the United States." ARTICLE V 　　1. This Protocol shall be subject to ratification in accordance with the applicable procedures of the United States and Jamaica and instruments of ratification shall be exchanged at Washington as soon as possible. 　　2. The Protocol shall enter into force upon the exchange of instruments of ratification and shall have effect in accordance with Article 29 (Entry Into Force) of the Convention. 　　In witness whereof the undersigned, being duly authorized thereto by their respective Governments, have signed this Protocol. 　　DONE in duplicate at Kingston this 17th day of July 1981. FOR THE GOVERNMENT OF THE 　　　　　　　　　　　　　FOR THE GOVERNMENT UNITED STATES OF AMERICA: 　　　　　　　　　　　　　OF JAMAICA: (s) Loren E. Lawrence. 　　　　　　　　　　　　　　(s) Edward P. G. Seaga NOTES OF EXCHANGE (PROTOCOL) THE EMBASSY OF THE UNITED STATES OF AMERICA Kingston, July 17, 1981. Rt. Hon. EDWARD P. G. SEAGA, Minister of Finance and Planning, Government of Jamaica, Kingston, Jamaica. DEAR Mr. MINISTER: I have the honor of commenting on the Protocol signed today amending the Convention between the Governments of the United States of America and Jamaica for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to taxes on Income, signed on the 21st day of May, 1980 ("the Convention"). The following understandings with respect to the Protocol were reached between the two Governments. 　　1. During the discussions of Article III of the Protocol, the Jamaican delegation expressed concern about possible implications of new Article 17 (Limitations on Benefits) contained in Article III with respect to investments that might be made in Jamaica by residents of third countries. The United States delegation assured Jamaica that the purpose of new Article 17 is to deny benefits under the Convention where residents of third countries use the Convention with a principal purpose of obtaining U.S. or Jamaican tax benefits that such persons would not otherwise be entitled to, not to impede investments in Jamaica by residents of third countries. 　　In order to assure that the objectives of new Article 17 are met, the delegations of the United States and Jamaica agreed that the requirements of paragraph 2 of Article 17 are satisfied and that benefits are not denied under Article 17 in particular circumstances. The particular circumstances are where a company resident in Jamaica and owned by individual residents of third countries derives income with respect to which the company claims U.S. tax benefits under the Convention, the company does not use such income in the manner described in paragraph 1(b) of Article 17 and: 　　(i) the company is engaged in business operations in Jamaica and the income with respect to which the company claims U.S. tax benefits is incidental to or derived in connection with the business operations in Jamaica; or 　　(ii) the individuals owning the company are residents of countries that have income tax conventions in force with the United States and, pursuant to such conventions, the individuals would have been entitled to U.S. tax benefits the same as, or substantially similar to, the U.S. tax benefits claimed by the company under this Convention, had the individuals earned the income directly. 　　This agreement between the delegations is reflected in paragraph 3 of new Article 17. Paragraph 3 is not intended to suggest that the requirements of paragraph 2 cannot be met in other circumstances, nor to limit the factors that may be taken into account in determining whether "the acquisition, ownership or maintenance of such person and the conduct of its operations did not have as a principal purpose obtaining benefits under this convention," as provided in paragraph 2. 　　2. During discussions involving the Protocol, the delegations of the United States and Jamaica noted the past and present cooperation between the United States and Jamaica on legal assistance in criminal matters, including fiscal crimes, and the willingness of the United States and Jamaica to enter into negotiations designed to enhance and formalize that cooperation through modern treaties on extradition and mutual legal assistance on criminal matters. 　　Accept, Mr. Minister, the renewed assurances of my high consideration. 　　　　　　　　　　　　　　　　　　　　　　　　(s) Loren E. Lawrence. 　　　　　　　　　　　　　　　　　　　MINISTRY OF FINANCE AND PLANNING, 　　　　　　　　　　　　　　　　　　　Jamaica, l7th July, 1981. HIS EXCELLENCY LOREN LAWRENCE, Ambassador of the United States of America. 　　EXCELLENCY: I have the honour to acknowledge receipt of your Note of the 17th of July, 1981 which reads as follows: 　　"I have the honour of commenting on the Protocol signed today amending the Convention between the Governments of the United States of America and Jamaica for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income, signed on the 21st day of May. 1980 ("the Convention"). The following understandings with respect to the Protocol were reached between the two Governments. 　　1. During the discussions of Article III of the Protocol, the Jamaican delegation expressed concern about possible implications of new Article 17 (Limitations on Benefits) contained in Article III with respect to investments that might be made in Jamaica by residents of third countries. The United States delegation assured Jamaica that the purpose of new Article 17 is to deny benefits under the Convention where residents of third countries use the Convention with a principal purpose of obtaining U.S. or Jamaican tax benefits that such persons would not otherwise be entitled to, not to impede investments in Jamaica by residents of third countries. 　　In order to assure that the objectives of new Article 17 are met, the delegations of the United States and Jamaica agreed that the requirements of paragraph 2 of Article 17 are satisfied and that benefits are not denied under Article 17 in particular circumstances. The particular circumstances are where a company resident in Jamaica and owned by individual residents of third countries derives income with respect to which the company claims U.S. tax benefits under the Convention, the company does not use such income in the manner described in paragraph 1(b) of Article 17 and: 　　(i) the company is engaged in business operations in Jamaica and the income with respect to which the company claims U.S. tax benefits is incidental to or derived in connection with the business operations in Jamaica; or 　　(ii) the individuals owning the company are residents of countries that have income tax conventions in force with the United States and, pursuant to such conventions, the individuals would have been entitled to U.S. tax benefits the same as, or substantially similar to, the U.S. tax benefits claimed by the company under this Convention, had the individuals earned the income directly. 　　This agreement between the delegations is reflected in paragraph 3 of new Article 17.　Paragraph 3 is not intended to suggest that the requirements of paragraph 2 cannot be met in other circumstances, nor to limit the factors that may be taken into account in determining whether "the acquisition, ownership or maintenance of such person and the conduct of its operations did not have as a principal purpose obtaining benefits under this Convention," as provided in paragraph 2. 　　2. During discussions involving the Protocol, the delegations of the United States and Jamaica noted the past and present cooperation between the United States and Jamaica on legal assistance in criminal matters, including fiscal crimes, and the willingness of the United States and Jamaica to enter into negotiations designed to enhance and formalize that cooperation through modern treaties on extradition and mutual legal assistance on criminal matters." 　　I have the honour to confirm that the foregoing understandings are in accord with the view of the Government of Jamaica and are approved by it. 　　Accept, Excellency, the renewed assurances of my highest consideration. 　　　　　　　　　　　　　　　　　　　　　(s) Edward P. G. Seaga, 　　　　　　　　　　　　　　　　　　　　　Prime Minister and 　　　　　　　　　　　　　　　　　　　　Minister of Finance and Planning.