3. a) A resident of a Contracting State that is not a qualified resident shall be entitled to the benefits of this Convention with respect to an item of income derived from the other State, if: 　　(i) the resident is engaged in the active conduct of a trade or business in the first-mentioned State, 　　(ii) the income is connected with or incidental to the trade or business, and 　　(iii) the trade or business is substantial in relation to the activity in the other State generating the income. 　　b) For purposes of this paragraph, the business of making or managing investments will not be considered an active trade or business unless the activity is　banking, insurance or securities activity conducted by a bank, insurance company or　registered securities dealer. c) Whether a trade or business is substantial for purposes of this paragraph will be　determined based on all facts and circumstances. In any case, however, a trade or　business will be deemed substantial if, for the preceding taxable year, or for the average　of the three preceding taxable years, the asset value, the gross income, and the payroll　expense that are related to the trade or business in the first-mentioned State equals at least 7.5 percent of the resident's (and any related parties') proportionate share of the asset value, gross income and payroll expense, respectively, that are related to the activity that generated the income in the other State, and the average of the three ratios exceeds 10 percent. 　　d) Income is derived in connection with a trade or business if the activity in the other State generating the income is a line of business that forms a part of or is complementary to the trade or business. Income is incidental to a trade or business if it facilitates the conduct of the trade or business in the other State. 　　4. A resident of a Contracting State that is not a qualified resident pursuant to the provisions of paragraph 2 may, nevertheless, be granted benefits of the Convention with respect to income arising in the other Contracting State if the competent authority of that other Contracting State so determines. 　　5. For the purposes of this Article, the term "recognized stock exchange" means: 　　a) the NASDAQ System owned by the National Association of Securities Dealers, Inc. and any stock exchange registered with the U.S. Securities and Exchange Commission as a national securities exchange under the U.S. Securities Exchange Act of 1934; and 　　b) the Riga stock exchange (Rigas Fondu Birza) and any other stock exchanges approved by the State authorities; and 　　c) any other stock exchange agreed upon by the competent authorities of the Contracting States. 　　6. The competent authorities of the Contracting States shall consult together with a view to developing a commonly agreed application of the provisions of this Article, including the publication of public guidance. The competent authorities shall, in accordance with the provisions of Article 27 (Exchange of Information and Administrative Assistance), exchange such information as is necessary for carrying out the provisions of this Article. ARTICLE 24 Relief from Double Taxation 　　1. In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended from time to time without changing the general principle hereof), the United States shall allow to a resident or citizen of the United States as a credit against the United States tax on income: 　　a) the Latvian tax paid by or on behalf of such resident or citizen; and 　　b) in the case of a United States company owning at least 10 percent of the voting stock of a company which is a resident of Latvia and from which the United States company receives dividends, the Latvian tax paid by or on behalf of the distributing company with respect to the profits out of which the dividends are paid. 　　2. In Latvia, double taxation shall be avoided as follows: 　　a) where a resident of Latvia derives income which, in accordance with this Convention, may be taxed in the United States, unless a more favorable treatment is provided in its domestic law, Latvia shall allow as a deduction from the tax on the income of that resident, an amount equal to the income tax paid thereon in the United States (other than any such tax imposed by reason of citizenship of the United States); such deduction shall not, however, exceed that part of the income tax in Latvia, as computed before the deduction is given, which is attributable to the income which may be taxed in the United States; 　　b) for the purposes of subparagraph a), where a company that is a resident of Latvia receives a dividend from a company that is a resident of the United States in which it owns at least 10 percent of its shares having full voting rights, the tax paid in the United States shall include not only the tax paid on the dividend, but also the appropriate portion of the tax paid on the underlying profits of the company out of which the dividend was paid. 　　3. For the purposes of allowing relief from double taxation pursuant to this Article, and subject to such source rules in the domestic laws of the Contracting States as apply for purposes of limiting the foreign tax credit, income derived by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention (other than solely by reason of citizenship in accordance with paragraph 4 of Article 1 (General Scope)) shall be deemed to arise in that other State. ARTICLE 25 Nondiscrimination 　　1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall apply to persons who are not residents of one or both of the Contracting States. However, for the purposes of United States taxation, United States nationals who are subject to tax on a worldwide basis are not in the same circumstances as nationals of Latvia who are not residents of the United States. 　　2. Stateless persons who are residents of a Contracting State shall not be subjected in either Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of the State concerned in the same circumstances are or may be subjected. However, for the purposes of United States taxation, United States nationals who are residents in Latvia and who are subject to tax on a worldwide basis are not in the same circumstances as stateless persons who are residents of Latvia. 　　3. The taxation on a permanent establishment which an enterprise of a Contracting State, or a fixed base which an individual who is a resident of a Contracting State, has in the other Contracting State shall not be less favorably levied in that other State than the taxation levied on enterprises or individuals who are residents of that other State carrying on the same activities. The provisions of this paragraph shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities that it grants to its own residents. 　　4. Except where the provisions of paragraph 1 of Article 9 (Associated Enterprises), paragraph 7 of Article 11 (Interest), or paragraph 5 of Article 12 (Royalties) apply, interest, royalties and other disbursements paid by a resident of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of the firstmentioned resident, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of a resident of a Contracting State to a resident of the other Contracting State shall, for the purposes of determining the taxable capital of the first-mentioned resident, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State. 　　5. Enterprises of a Contracting State, 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 State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected. 　　6. Nothing in this Article shall be construed as preventing either Contracting State from imposing a tax as described in paragraph 5 of Article 10 (Dividends). 　　7. The provisions of this Article shall, notwithstanding the provisions of Article 2 (Taxes Covered), apply to taxes of every kind and description imposed by a Contracting State or a political subdivision or local authority thereof. ARTICLE 26 Mutual Agreement Procedure 　　1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of either Contracting State. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention. 　　2. The competent authority shall endeavor, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits or other procedural limitations in the domestic law of the Contracting States. 　　3. The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. In particular the competent authorities of the Contracting States may agree: 　　a) to the same attribution of income, deductions, credits, or allowances of an enterprise of a Contracting State to its permanent establishment situated in the other Contracting State; 　　b) to the same allocation of income, deductions, credits, or allowances between persons; 　　c) to the same characterization of particular items of income; 　　d) to the same characterization of persons; 　　e) to the same application of source rules with respect to particular items of income; 　　f) to a common meaning of a term; 　　g) to increases in any specific dollar amounts referred to in the Convention to reflect economic or monetary developments; 　　h) to advance pricing arrangements; and 　　i) to the application of the provisions of domestic law regarding penalties, fines, and interest in a manner consistent with the purposes of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention. 　　4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. ARTICLE 27 Exchange of Information and Administrative Assistance 　　1. The competent authorities of the Contracting States shall exchange such information as is relevant for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention insofar as the taxation thereunder is not contrary to the Convention, including the assessment of, collection of, the enforcement or prosecution in respect of or the determination of appeals in relation to the taxes covered by the Convention. The exchange of information is not restricted by Article 1 (General Scope). Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment, collection or administration of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 　　2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: 　　a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; 　　b) to supply information which is 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 be contrary to public policy (ordre public). 　　3. Notwithstanding paragraph 2, laws or practices of the requested State pertaining to the disclosure of information by financial institutions, nominees or persons acting in an agency or fiduciary capacity, or respecting ownership of debt instruments or interests in a person shall not affect the authority of the requested State. The competent authorities shall have the authority to obtain and provide information notwithstanding such disclosure laws and practices. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall obtain the information to which the request relates in the same manner and to the same extent as if the tax of the first-mentioned State were the tax of that other State and were being imposed by that other State. If specifically requested by the competent authority of a Contracting State, the competent authority of the other Contracting State shall provide information under this Article in the form of depositions of witnesses and authenticated copies of unedited original documents (including books, papers, statements, records, accounts, and writings), to the same extent such depositions and documents can be obtained under the laws and administrative practices of that other State with respect to its own taxes. 　　4. Each of the Contracting States shall endeavor to collect on behalf of the other Contracting State such amounts as may be necessary to ensure that relief granted by the Convention from taxation imposed by that other State does not inure to the benefit of persons not entitled thereto. 　　5. Paragraph 4 shall not impose upon either of the Contracting States the obligation to carry out administrative measures which are of a different nature from those used in the collection of its own taxes, or which would be contrary to its sovereignty, security, or public policy. 　　6. For the purposes of this Article, the Convention shall apply, notwithstanding the provisions of Article 2 (Taxes Covered), to taxes of every kind imposed by a Contracting State. 　　7. The competent authority of the requested State shall allow representatives of the applicant State to enter the requested State to interview individuals and examine books and records with the consent of the persons contacted and the competent authority of the requested State. ARTICLE 28 Members of Diplomatic Missions and Consular Posts 　　Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements. ARTICLE 29 Entry into Force 　　1. The Governments of the Contracting States shall notify each other through diplomatic channels when the constitutional requirements for the entry into force of the Convention have been complied with. 　　2. The Convention shall enter into force on the date of the later of the notifications referred to in paragraph 1, and its provisions shall have effect in both Contracting States: 　　a) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January of the calendar year next following the year in which the Convention enters into force; 　　b) in respect of other taxes on income, for taxable years beginning on or after the first day of January of the calendar year next following the year in which the Convention enters into force. 　　3. The appropriate authorities of the Contracting States shall consult within a five-year period from the date on which this Convention enters into force with respect to the application of the Convention, including the negotiation of an amendment to the Convention by means of a protocol (if appropriate), to income derived from new technologies (such as payments received for transmission by satellite, cable, optic fibre or similar technology). ARTICLE 30 Termination 　　This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention by giving written notice of termination, through diplomatic channels, at least 6 months before the end of any calendar year. In such event, the Convention shall cease to have effect in both Contracting States: 　　a) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January of the calendar year next following the year in which the notice has been given; 　　b) in respect of other taxes on income, for taxable years beginning on or after the first day of January of the calendar year next following the year in which the notice has been given. 　　IN WITNESS WHEREOF, the undersigned, being duly authorized thereto, have signed this Convention. 　　DONE at Washington in duplicate, in the English and Latvian languages, both texts being equally authentic, this 15th day of January, 1998. FOR THE UNITED STATES FOR THE REPUBLIC OF AMERICA: OF LATVIA: (s) Robert. E. Rubin (s) Valdis Birkavs