Paragraph 5 　　Paragraph 5 provides that the term "recognized stock exchange" means 　　(a) in the United States, the NASDAQ System owned by the National Association of Securities Dealers, and any stock exchange registered with the Securities and Exchange Commission as a national securities exchange for purposes of the Securities Exchange Act of 1934; and 　　(b) in Lithuania, the National Stock Exchange of Lithuania (Nacionaline vertybiniu popieriu birza), and any other stock exchanges approved by the State Authorities. In addition, subparagraph (c) of paragraph 5 provides for the competent authorities to agree upon any other recognized stock exchanges. Other exchanges, including exchanges located in third countries, may be recognized for this purpose by agreement of the competent authorities. Paragraph 6 　　Paragraph 6 provides additional authority to the competent authorities (in addition to that of Article 26 (Mutual Agreement Procedure)) to consult together to develop a common application of the provisions of this Article, including the publication of regulations or other 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 to carry out the provisions of the Article. ARTICLE 24 Relief from Double Taxation 　　This Article describes the manner in which each Contracting State undertakes to relieve double taxation. The United States uses the foreign tax credit method both under internal law, and by treaty. Under Lithuanian law, Lithuania uses a foreign tax credit for purposes of the enterprise tax, but allows only a deduction from income under the personal income tax. Under Article 24, however, Lithuania allows a credit for both taxes. Paragraph 1 　　The United States agrees, in paragraph 1, to allow to its citizens and residents a credit against U.S. tax for income taxes paid or accrued to Lithuania. Paragraph 1(a), by referring to "Lithuanian tax", which is the term used in Article 2 (Taxes Covered) to describe Lithuania's taxes covered, also makes clear that Lithuania's covered taxes are to be treated as income taxes under Article 24, for U.S. foreign tax credit purposes. The provision of a credit for these taxes is based on the Treasury Department's review of Lithuania's laws. 　　The credit under the Convention is allowed in accordance with the provisions and subject to the limitations of U.S. law, as that law may be amended over time, so long as the general principle of this Article (i.e., the allowance of a credit) is retained. Thus, although the Convention provides for a foreign tax credit, the terms of the credit are determined by the provisions, at the time a credit is given, of the U.S. statutory credit. 　　As indicated, the U.S. credit under the Convention is subject to the various limitations of U.S. law (see Code sections 901 - 908). For example, the credit against U.S. tax generally is limited to the amount of U.S. tax due with respect to net foreign source income within the relevant foreign tax credit limitation category (see Code section 904(a) and (d)), and the dollar amount of the credit is determined in accordance with U.S. currency translation rules (see, e.g., Code section 986). Similarly, U.S. law applies to determine carryover periods for excess credits and other interyear adjustments. When the alternative minimum tax is due, the alternative minimum tax foreign tax credit generally is limited in accordance with U.S. law to 90 percent of alternative minimum tax liability. Furthermore, nothing in the Convention prevents the limitation of the U.S. credit from being applied on a per-country basis (should internal law be changed), an overall basis, or to particular categories of income (see, e.g., Code section 865(h)).　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　 　　Subparagraph (b) provides for a deemed-paid credit, consistent with section 902 of the Code, to a U.S. corporation in respect of dividends received from a Lithuanian corporation, of which the U.S. corporation owns at least 10 percent of the voting stock. This credit is for the tax paid by the Lithuanian corporation on the profits out of which the dividends are considered paid. Paragraph 2 　　Paragraph 2 contains the rules under which Lithuania will avoid double taxation under the Convention. Under subparagraph (a) of this paragraph, Lithuania agrees to allow a credit to a resident of Lithuania deriving income from the United States for United States tax paid (as defined in subparagraph 1(a) of Article 2), to the extent it is paid in accordance with the Convention. The credit is for the full amount of United States tax, but not to exceed the Lithuanian tax on that income. The provision does not apply with respect to United States tax imposed on a resident of Lithuania by reason of that person's U.S. citizenship, under the saving clause in paragraph 4 of Article 1 (General Scope). The paragraph also specifies that, consistent with paragraph 2 of Article 1, if a more favorable treatment is provided under Lithuanian law, that treatment will take precedence over the credit provided in the Convention. 　　Subparagraph (b) provides for a deemed-paid credit to a Lithuanian corporation in respect of dividends received from a corporation resident in the United States of which the Lithuanian corporation controls, directly or indirectly, at least 10 percent of the voting power. This credit is for the tax paid by the U.S. corporation on the profits out of which the dividends are paid, in addition to the U.S. tax paid by the Lithuanian corporation on the dividend itself. Paragraph 3 　　For the purposes of allowing relief from double taxation pursuant to this Article, 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. Except as provided in Article 13 (Capital Gains), the preceding sentence is subject to such source rules in the domestic laws of the Contracting States as apply for purposes of limiting the foreign tax credit. Relation to Other Articles 　　By virtue of the exceptions in subparagraph 5(a) of Article 1 (General Scope), this Article is not subject to the saving clause of paragraph 4 of Article 1. Thus, the United States will allow a credit to its citizens and residents in accordance with the Article, even if such credit were to provide a benefit not available under the Code. ARTICLE 25 Nondiscrimination 　　This Article assures that nationals of a Contracting State, in the c ase of paragraph 1, and residents of a Contracting State, in the case of paragraphs 2 through 4, will not be subject, directly or indirectly, to discriminatory taxation in the other Contracting State. For this purpose, nondiscrimination means providing national treatment. Not all differences in tax treatment, either as between nationals of the two States, or between residents of the two States, are violations of this national treatment standard. Rather, the national treatment obligation of this Article applies only if the nationals or residents of the two States are comparably situated. 　　Each of the relevant paragraphs of the Article provides that two persons that are comparably situated must be treated similarly. Although the actual words differ from paragraph to paragraph (e.g., paragraph 1 refers to two persons "in the same circumstances," paragraph 2 refers to two enterprises "carrying on the same activities" and paragraph 4 refers to two enterprises that are "similar"), the common underlying premise is that if the difference in treatment is directly related to a tax-relevant difference in the situations of the domestic and foreign persons being compared, that difference is not to be treated as discriminatory (e.g., if one person is taxable in a　Contracting State on worldwide income and the other is not, or if tax may be collectible from one person at a later stage, but not from the other, distinctions in treatment would be justified under paragraph 1). Other examples of such factors that can lead to nondiscriminatory differences in treatment will be noted in the discussions of each paragraph. 　　The operative paragraphs of the Article also use different language to identify the kinds of differences in taxation treatment that will be considered discriminatory. For example, paragraphs 1 and 4 speak of "any taxation or any requirement connected therewith that is other or more burdensome," while paragraph 2 specifies that a tax "shall not be less favorably levied." Regardless of these differences in language, only differences in tax treatment that materially disadvantage the foreign person relative to the domestic person are properly the subject of the Article. Paragraph 1 　　Paragraph 1 provides that a national of one Contracting State may not be subject to taxation or connected requirements in the other Contracting State that are different from, or more burdensome than, the taxes and connected requirements imposed upon a national of that other State in the same circumstances. As noted above, whether or not the two persons are both taxable on worldwide income is a significant circumstance for this purpose. Although, like the OECD Model, the text refers to "residence" rather than to "taxation on worldwide income," as a relevant circumstance, since, for most countries, worldwide taxation is based on residence, while in the United States it is based on citizenship, the intent of both approaches is clearly the same. This is confirmed by the last sentence of the paragraph, which states that the United States is not required to apply the same taxing regime to a national of Lithuania who is not resident in the United States and a U.S. national who is not resident in the United States. United States citizens who are not residents of the United States but who are, nevertheless, subject to United States tax on their worldwide income are not in the same circumstances with respect to United States taxation as citizens of Lithuania who are not United States residents. Thus, for example, Article 25 would not entitle a national of Lithuania resident in a third country to taxation at graduated rates on U.S.source dividends or other investment income that applies to a U.S. citizen resident in the same third country. 　　A national of a Contracting State is afforded protection under this paragraph even if the national is not a resident of either Contracting State. Thus, a U.S. citizen who is resident in a third country is entitled, under this paragraph, to the same treatment in Lithuania as a citizen of Lithuania who is in similar circumstances (i.e., who is resident in a third State). The term "national" in relation to a Contracting State is defined in subparagraph 1(i) of Article 3 (General Definitions). The term includes both individuals and juridical persons. Paragraph 2 　　Paragraph 2 of the Article provides that a Contracting State may not tax a permanent establishment of an enterprise of the other Contracting State, or a fixed base of an individual resident of the other State, less favorably than an enterprise or individual resident of that first-mentioned State that is carrying on the same activities. This provision, however, does not obligate a Contracting State to grant to a resident of the other Contracting State any tax allowances,reliefs, etc., that it grants to its own residents on account of their civil status or family responsibilities. Thus, if a sole proprietor who is a resident of Lithuania has a permanent establishment in the United States, in assessing income tax on the profits attributable to the permanent establishment, the United States is not obligated to allow to the resident of Lithuania the personal allowances for himself and his family that he would be permitted to take if the permanent establishment were a sole proprietorship owned and operated by a U.S. resident, despite the fact that the individual income tax rates would apply. Business related expenses, however, must be allowed as deductions to the Lithuanian resident to the same extent that they would be allowed to a U.S. resident. 　　The fact that a U.S. permanent establishment of a Lithuanian enterprise is subject to U.S. tax only on income that is attributable to the permanent establishment, while a U.S. corporation engaged in the same activities is taxable on its worldwide income is not, in itself, a sufficient difference to deny national treatment to the permanent establishment. There are cases, however, where the two enterprises would not be similarly situated and differences in treatment may be warranted. For instance, it would not be a violation of the nondiscrimination protection of paragraph 2 to require the Lithuanian enterprise to provide information in a reasonable manner that may be different from the information requirements imposed on a resident enterprise, because information may not be as readily available to the Internal Revenue Service from a foreign as from a domestic enterprise. Similarly, it would not be a violation of paragraph 2 to impose penalties on persons who fail to comply with such a requirement (see, e.g., sections 874(a) and 882(c)(2)). Further, a determination that income and expenses have been attributed or allocated to a permanent establishment in conformity with the principles of Article 7 (Business Profits) implies that the attribution or allocation was not discriminatory. 　　Section 1446 of the Code imposes on any partnership with income that is effectively connected with a U.S. trade or business the obligation to withhold tax on amounts allocable to a foreign partner. In the context of this Convention, this obligation applies with respect to a share of the partnership income of a partner resident in Lithuania, and attributable to a U.S. permanent establishment. There is no similar obligation with respect to the distributive shares of U.S.resident partners. It is understood, however, that this distinction is not a form of discrimination within the meaning of paragraph 2 of the Article. No distinction is made between U.S. and non- U.S. partnerships, since the law requires that partnerships of both U.S. and non-U.S. domicile withhold tax in respect of the partnership shares of non-U.S. partners. Furthermore, in distinguishing between U.S. and non-U.S. partners, the requirement to withhold on the non-U.S. but not the U.S. partner's share is not discriminatory taxation, but, like other withholding on nonresident aliens, is merely a reasonable method for the collection of tax from persons who are not continually present in the United States, and as to whom it otherwise may be difficult for the United States to enforce its tax jurisdiction. If tax has been over-withheld, the partner can, as in other cases of over-withholding, file for a refund. (The relationship between paragraph 2 and the imposition of the branch tax is dealt with below in the discussion of paragraph 5.) 　　Paragraph 2 obligates the host State to provide national treatment not only to permanent establishments of an enterprise of the other Contracting State, but also to other residents of that State that are taxable in the host State on a net basis because they derive income from independent personal services performed in the host State that is attributable to a fixed base in that State. Thus, an individual resident of Lithuania who performs independent personal services in the United States, and who is subject to U.S. income tax on the income from those services that is attributable to a fixed base in the United States, is entitled to no less favorable tax treatment in the United States than a U.S. resident engaged in the same kinds of activities. With such a rule in a treaty, the host State cannot tax its own residents on a net basis, but disallow deductions (other than personal allowances, etc.) of a resident in the other Contracting State with respect to the income attributable to the fixed base. Similarly, in accordance with paragraph 6 of Article 6 (Income from Immovable (Real) Property), the situs State would be required to allow deductions to a resident of the other State with respect to income derived from real property located in the situs State to the same extent that deductions are allowed to residents of the situs State with respect to income derived from real property located in the situs State. Paragraph 3 　　Paragraph 3 prohibits discrimination in the allowance of deductions. When an enterprise of a Contracting State pays interest, royalties or other disbursements to a resident of the other Contracting State, the first-mentioned Contracting State must allow a deduction for those payments in computing the taxable profits of the enterprise as if the payment had been made under the same conditions to a resident of the first-mentioned Contracting State. An exception to this rule is provided for cases 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, because in these situations, the related parties have entered into transactions on a non-arms-length basis. This exception would include the denial or deferral of certain interest deductions under Code section 163(j). 　　The term "other disbursements" is understood to include a reasonable allocation of executive and general administrative expenses, research and development expenses and other expenses incurred for the benefit of a group of related persons that includes the person incurring the expense. 　　Paragraph 3 also provides that any debts of an enterprise of a Contracting State to a resident of the other Contracting State are deductible in the first-mentioned Contracting State for computing the capital tax of the enterprise under the same conditions as if the debt had been contracted to a resident of the first-mentioned Contracting State. Even though, for general purposes, the Convention covers only income taxes, under paragraph 6 of this Article, the nondiscrimination provisions apply to all taxes levied in both Contracting States, at all levels of government. Thus, this provision may be relevant for both States. Lithuania does impose property tax, and in the United States such taxes are imposed by local governments.