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13059 Bahrain - Agreement to Exempt from Income Tax Certain Income Derived from the International Operation of a Ship or Ships and Aircraft


   
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TREATIES AND OTHER INTERNATIONAL ACTS SERIES 13059

 

 

TAXATION

Shipping and Aircraft

 

 

 


Agreement Between the
UNITED STATES OF AMERICA
and BAHRAIN

Effected by Exchange of Notes
Dated at Manama September 1 and 12, 1999

 

 

 

 

 

NOTE BY THE DEPARTMENT OF STATE

Pursuant to Public Law 89—497, approved July 8, 1966
(80 Stat. 271; 1 U.S.C. 113)—

“. . .the Treaties and Other International Acts Series issued
under the authority of the Secretary of State shall be competent
evidence . . . of the treaties, international agreements other than
treaties, and proclamations by the President of such treaties and
international agreements other than treaties, as the case may be,
therein contained, in all the courts of law and equity and of maritime
jurisdiction, and in all the tribunals and public offices of the
United States, and of the several States, without any further proof
or authentication thereof.”

 

BAHRAIN

Taxation: Shipping and Aircraft

Agreement effected by exchange of notes
Dated at Manama September 1, and 12, 1999;
Entered into force September 12, 1999.

EMBASSY OF THE
UNITED STATES OF AMERICA
No. 201
The Embassy of the United States of America
presents its compliments to the Ministry of Foreign
Affairs of the State of Bahrain and has the honor
to propose that the two Governments conclude an
agreement to exempt from income tax, on a reciprocal
basis, certain income derived from the international
operation of a ship or ships and aircraft as follows:
The Government of the United States of America,
in accordance with sections 872(b) and 883 (a) of the
U.S. internal revenue code of 1986, agrees to exempt
from U.S. federal income tax gross income derived from
the international operation of a ship or ships or
aircraft by individuals who are residents of Bahrain
(other than U.S. citizens or residents) and
corporations that are organised in Bahrain, in each
case, that are engaged in the international operation
of a ship or ships or aircraft. This exemption shall
be granted on the basis of equivalent exemptions
granted by Bahrain to individual residents of the
United States and to corporations organized in the
United States.
In the case of a Bahrain corporation, the
exemption shall apply only if the corporation meets
the ownership or public trading requirements of U.S.
Law. For purposes of such ownership requirements, the
Government of Bahrain shall be treated as an
individual resident of Bahrain.
Gross income derived from the international
operation of a ship or ships or aircraft includes:
--(1) income from the rental on a full (time or
voyage) basis of a ship or ships or aircraft used in
international transport;
--(ii) income from the rental on a bareboat basis of
a ship or ships or aircraft used in international
transport;
--(iii) income from the rental of containers and
related equipment used in international transport that
is incidental to income from the international
operation of a ship or ships or aircraft;
--(iv) gains from the sale or other alienation of a
ship or ships or aircraft used in international
transport; and
2
--(v) income derived by an individual or corporation
otherwise engaged in the international operation of a
ship or ships or aircraft from active participation in
a pool, an alliance, joint venture, international
operating agency, or other venture, that is itself
engaged in the international operation of a ship or
ships or aircraft
The Embassy, on behalf of the Government of the
United states of America, proposes that if the
foregoing is acceptable to the Government of Bahrain,
this note and the Ministry's reply note shall
constitute an agreement between the two Governments,
which shall enter into force on the date of the
Ministry's reply note and shall have effect with
respect to taxable years beginning on or after
January 1, 1999. It shall remain in force until
terminated by either Government giving written notice
to the other Government through diplomatic channels.
3
The Embassy of the United States avails itself of
this opportunity to renew to the Ministry of Foreign
Affairs of the State of Bahrain the assurance of its
highest consideration.
Embassy of the United States of America
Manama, September 1, 1999.
4
STATE OF BAHRAIN
MINISTRY OF FOREIGN AFFAIRS
6/100/231- 13306
12th September, 1999
Date .......
Note Verbale

The Ministry of Foreign Affairs of the State of Bahrain presents its compliments
to the Embassy of the United States of America to the State of Bahrain and has the
honour to acknowledge receipt of the Embassy's note of 1st September, 1999
proposing an agreement to exempt from Bahrain tax gross income derived from
the international operation of a ship or ships or aircraft by individual residents of
the United States and by corporations organized in the United States, in each case,
that are engaged in the international operation of a ship or ships or aircraft. This
exemption shall be granted on the basis of equivalent exemptions granted by the
United States to individuals who are residents of Bahrain (other than U.S. citizens
or residents) and to corporations that are organized in Bahrain.
The terms of the agreement are as follows:
The Government of Bahrain agrees to exempt from Bahrain tax gross income
derived from the international operation of a ship or ships or aircraft by
individuals who are residents of the United States and corporations that are
organized in the United States, in each case, that are engaged in the international
operation of a ship or ships or aircraft.
This exemption is granted on the basis of equivalent exemptions granted by the
United States under the terms of your note of 1st September, 1999.
Gross income derived from the international operation of a ship or ships or aircraft
includes:
(i) income from the rental on a full (time or voyage) basis of ship or ships or
aircraft used in international transport;
(ii) income from the rental on a bareboat basis of a ship or ships or aircraft used
in international transport;
(iii) income from the rental of containers and related equipment used in
international transport that is incidental to income from the international
operation of a ship or ships or aircraft;
(iv) gains from the sale or other alienation of a ship or ships or aircraft used in
international transport; and
(v) income derived by an individual or corporation otherwise engaged in the
international operation of a ship or ships or aircraft from active
participation in a pool, in alliance, joint venture, international operating
agency, or other venture, that is itself engaged in the international operation
of a ship or ships or aircraft.
The Ministry of Foreign Affairs of the State of Bahrain confirms that the
Government of Bahrain accepts the proposal contained in the Embassy's Note
No.201 and that the Embassy's note and this note in reply constitute an agreement
between the two Governments, which shall enter into force on the date of this note
and shall have effect with respect to taxable years beginning on or after January 1,
1999. It shall remain in force until terminate by either Government giving written
notice to the other Government through diplomatic channels.
The Ministry of Foreign Affairs of the State of Bahrain takes this opportunity to
renew to the Embassy of the United States of America the assurances of its highest
consideration.
Ministry of Foreign Affairs
State of Bahrain
2
12th September 1999



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