At the signing today of the Convention between the United States of America and the Russian Federation for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, the Parties have agreed upon the following provisions, which shall form an integral part of the Convention: 1. With regard to Article 6, 　　(a) A Contracting State's right to impose tax under Article 6 on a resident or the other Contracting State extends only to profits attributable to a permanent establishment in the first State. A resident of the other State may earn income from more than one investment or activity; under Article 6, income from any particular investment or activity, whether from a source in the first State or elsewhere, must be separately tested to determine whether it may be included in profit attributable to a permanent establishment in the first State. 　　Whether profits are attributable to a permanent establishment is determined on the basis of the actual information about an investment. In particular, profits are attributable to a permanent establishment only if the profits are derived from the assets employed by, or the activities engaged in by, the permanent establishment. Profits derived from other assets or activities are not attributable to the permanent establishment. 　　Example 1. A resident of a Contracting State is engaged in the other Contracting State in a construction project. The duration of the construction is 4 years. Under paragraph 3 of Article 5 a construction site which lasts for more than 18 months constitutes a permanent establishment in the other State, and profits derived from the construction activities are therefore liable to a tax in that other State. The resident simultaneously sells equipment for another project owned by the same customer. The signing (but not the negotiation) of the contract for the sale of equipment takes place in the other State. Under paragraph 4 f ) of Article 5, the mere signing of contracts in the other State in one's own name does not constitute a permanent establishment. Profits derived from the sales of equipment shall not be liable to tax in that other State. 　　Example 2. A company resident in a Contracting State is engaged in oil and gas exploration, development and production activities on a worldwide basis. The company is producing oil and gas through a well located in the other Contracting State. The company is also engaged in exploration in the other State. The exploration activities are not carried on at the site of the well, are not conducted by the employees of the well site, do not use assets from the well site and are concluded within 18 months. The company also occasionally rents drilling equipment not currently being used in its exploration activities to third parties for use in the other State. Under paragraph 2 f ) of Article 5, the well located in the other State is a permanent establishment; the profits attributable to that permanent establishment may be taxed by the other State under Article 6. Under paragraph 3 of Article 5, the exploration activities do not constitute a permanent establishment in the other State, and the expenses associated with such activities may not be deducted in determining the profits from the well taxable in the other State. The rental of the drilling equipment does not constitute a permanent establishment in the other State, and the income from such rental is not derived from the assets or activities of the well site. The rental income is therefore not taxable in the other State. 　　(b) A resident of a Contracting State maintaining a permanent establishment in the other Contracting State may also maintain offices in other countries, including a home office in the first State and offices in third countries. In computing the profits of the permanent establishment, properly substantiated payments to third parties by the home office or by offices in third countries should be taken into account to the extent such payments relate to the assets or activities of the permanent establishment, or to the extent that such payments relate to the assets or activities of the resident as a whole and are reasonably allocable to the permanent establishment. It is not necessary that such payments actually be reimbursed by the permanent establishment to the home office or the offices in the third country. 　　(c) Under paragraph 3, the Russian Federation agrees that there shall be allowed to a permanent establishment, in computing a tax payable on its profit or income, a deduction for interest, whether paid to a bank or another person and without regard to the period of the loan. The deduction may not exceed the limitation under Russian tax law, as long as the limitation is not less than the London Interbank Offered Rate ("LIBOR") plus a reasonable risk premium to be provided for in the loan agreement. 　　(d) It is understood that the documentation of expenses claimed as deductions by a permanent establishment pursuant to the provisions of paragraph 3 need not be submitted with the tax return but must be made available by the taxpayer on the request of the tax authorities. 　　　　　　　　2.With regard to Article 10, 　　(a) In the case of dividends from a United States Regulated Investment Company, subparagraph (b), and not subparagraph (a), of paragraph 2 shall apply. In the case of dividends from a United States Real Estate Investment Trust, the rate of withholding applicable under domestic law shall apply. 　　(b) The term "dividend equivalent amount," as used in paragraph 5, refers to the portion of the profits of a permanent establishment subject to a tax under Article 6 (Business Profits), or that portion of the profits of a resident of one State subject to tax on a net basis in the other State under Article 9 (Income from Real Property) or paragraph 3 of Article 19 (Other Income), that is comparable to the amount that would be distributed as a dividend if such income were earned by a locally incorporated subsidiary. In the case of the United States, the term "dividend equivalent amount" shall have the same meaning that it has under the law of the United States as it may be amended from time to time without changing the general principle of this paragraph 2(b) of the Protocol. 　　　　　　　　　3.With regard to Article 11, 　　Notwithstanding the provisions of paragraph 1, the United States may tax an excess inclusion with respect to a Real Estate Mortgage Interest Conduit ("REMIC") in accordance with its domestic law. 　　　　　　　　　4.With regard to Article 13, 　　Taxes withheld at the source in a Contracting State at the rates provided by domestic law will be refunded in a timely manner on application by the taxpayer if the right to collect the said taxes is limited by the provisions of the Convention, including Article 13. 　　　　　　　　　5.With regard to Article 14, 　　It is understood, with respect to subparagraph (b) of paragraph 3, that temporary absences of less than one month will be disregarded for purposes of measuring the 12 consecutive month period. It is further understood that an individual described in subparagraph (b) of paragraph 3 may be employed at more than one such place of business. 　　　　　　　　　6.With regard to Article 19, 　　Under paragraph 3, the United States retains the right to tax a "United States real property interest" as defined in section 897 of the U.S. Internal Revenue Code (or any successor provision), as well as an interest in a partnership, trust or estate to the extent attributable to a United States real property interest. 　　　　　　　　7.With regard to Article 20, 　　In the United States, the term "officially recognized securities exchange" means the NASDAQ System owned by the National Association of Securities Dealers, Inc., and any stock exchange registered with the Securities Exchange Commission as a national securities exchange for purposes of the Securities Exchange Act of 1934. 　　　　　　　　8.With regard to Article 22, 　　(a) It is understood that in the case of an individual resident in Russia who is also a citizen of the United States, the credit required to be granted against the Russian tax on income shall include a credit for the income tax paid by such individuals to the United States imposed solely by reason of citizenship, subject only to a limitation of such credit to the Russian tax on income from all sources outside the Russian Federation. 　　(b) The Russian Federation agrees that an entity that is a resident of Russia and at least 30 percent beneficially owned by residents of the United States, and that has total corporate capital of at least $100,000 (or the equivalent value in rubles), shall, in computing the profits tax, be permitted deductions for interest, whether paid to a bank or another person and without regard to the period of the loan, and for actual wages and other remuneration for personal services. In the event that the Russian law "Tax on profit from Enterprises and Organizations" (or a substantially similar profits tax law) ceases to be in effect, such resident will be permitted to continue to compute its tax in the manner stipulated by such law, taking into account the provisions of this subparagraph (b). Corporate capital includes the capital investment of all participants, including residents of Russia, the United States, and third countries. In the case of interest, the deduction may not exceed the limitation under Russian tax law, as long as the limitation is not less than the London Inter-bank Offered Rate ("LIBOR") plus a reasonable risk premium to be provided for in the loan agreement. 　　(c) The Russian Federation agrees that if a banking, insurance or other financial business is carried on in Russia by a permanent establishment of a United States resident, or by a resident of Russia that is at least 30 percent beneficially owned by residents of the United States and has total corporate capital of at least $100,000 (or the equivalent value in rubles), such permanent establishment or resident of Russia shall be permitted deductions for interest, whether paid to a bank or another person and without regard to the period of the loan, and for actual wages and other remuneration for personal services; provided that such person will apply the tax rates in effect in accordance with the law on taxation of profits. In the event that such law ceases to be in effect, such permanent establishment or resident will be permitted to continue to compute its tax in the manner stipulated by this subparagraph (c). Corporate capital includes the capital investment of all participants, including residents of Russia, the United States, and third countries. In the case of interest, the deduction may not exceed the limitation under Russian tax law, as long as the limitation is not less than the London Inter-bank Offered Rate ("LIBOR") plus a reasonable risk premium to be provided for in the loan agreement. FOR THE UNITED STATES FOR THE RUSSIAN OF AMERICA: FEDERATION: (s) George Bush (s) Boris Yelsin