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13077 Saudi Arabia - Agreement for Reciprocal Exemption of Taxes on Income from the International Operation of a Ship or Ships or Aircraft


   
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TREATIES AND OTHER INTERNATIONAL ACTS SERIES 13077

 

 

TAXATION

Shipping and Aircraft

 

 

 


Agreement Between the
UNITED STATES OF AMERICA
and SAUDI ARABIA

Signed at Riyadh December 11, 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.”

 

SAUDI ARABIA

Taxation: Shipping and Aircraft

Agreement signed at Riyadh December 11, 1999;
Entered into force January 31, 2000.

AN AGREEMENT BETWEEN
THE GOVERNMENT OF THE UNITED STATES OF AMERICA
AND
THE GOVERNMENT OF THE KINGDOM OF SAUDI ARABIA
FOR
RECIPROCAL EXEMPTION OF TAXES ON INCOME FROM THE
INTERNATIONAL OPERATION OF A SHIP OR SHIPS OR AIRCRAFT
The Government of the United States of America and the Government of the
Kingdom of Saudi Arabia, hereinafter "the Contracting Parties", desiring to conclude an
Agreement for reciprocal exemption with respect to taxes levied on income from the
international operation of a ship or ships or aircraft,
Have agreed as follows:
2
Article I
TAXES COVERED
1. This Agreement shall apply to all taxes on income derived from the international
operation of a ship or ships or aircraft imposed by each Contracting Party
irrespective of the manner in which such taxes are levied.
2. There shall be regarded as taxes on income derived from the international
operation of a ship or ships or aircraft all taxes imposed on the total of such
income or imposed on elements of such income.
3. The taxes to which this Agreement shall apply are:
a) In the case of the Kingdom of Saudi Arabia, any Saudi tax described in
paragraphs 1 and 2 (hereinafter referred to as "Saudi tax"); and
b) In the case of the United States, Federal income taxes described in
paragraphs 1 and 2 imposed by the U.S. Internal Revenue Code,
including the tax on gross income imposed by section 887 and, as
provided in section 884(d)(2), the branch profits tax (hereinafter referred
to as "United States tax").
3
Article II
DEFINITIONS
1. In this Agreement, unless the context otherwise requires:
a) The terms "a Contracting Party" and "the other Contracting Party" mean
the Government of the Kingdom of Saudi Arabia or the Government of the
United States of America, as the context requires;
b) The term "tax" means "Saudi tax" or "United States tax", as the context
requires;
c) The term "operation of a ship or ships or aircraft" means the
transportation by sea or air, as the context requires, of persons, baggage,
livestock, goods, merchandise or mail, including the sale of tickets and
similar documents used for the purpose of such transport, and other
directly related activities, carried on by the owner, lessor, or charterer of a
ship or aircraft;
d) The term "international operation" or "international transport" means
operation as defined in paragraph (c), except where the operation of the
ship or aircraft is solely between places in a Contracting Party;
e) The term "income derived from the international operation of a ship or
ships or aircraft" includes:
i) Income derived from the rental on a full (time or voyage) basis of a
ship or ships or aircraft used in international transport;
ii) Income derived from the rental on a bareboat basis of a ship or
ships or aircraft used in international transport;
iii) Income derived from the rental of containers and related equipment
used in international transport that is incidental to income from the
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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;
v) Income derived from the international operation of a ship or ships
or aircraft by an individual resident of a Contracting Party, or a
corporation organized in a Contracting Party, engaged in the
international operation of a ship or ships or aircraft from its
participation in a pool, an alliance, joint businesses, international
operating agency, or other venture that is itself engaged in the
international, operation of a ship or ships or aircraft;
f) For Saudi tax purposes, open taxable years are taxable years for which
taxes have not been paid for any reason. For U.S. tax purposes, open
taxable years are taxable years for which the statute of limitations is not
closed.
g) The term "competent authority" means:
i) In the case of Saudi Arabia, the Ministry of Finance & National
Economy; and

ii) In the case of the United States, the Secretary of the Treasury or
his delegate.
2. In the application of the provisions of this Agreement by a Contracting Party any
term not otherwise defined shall, unless the context otherwise requires, have the
meaning which it has at that time under the laws of that Contracting Party
relating to the taxes which are the subject of this Agreement.
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Article III
SHIPPING AND AIR TRANSPORT
1. Income derived from the international operation of a ship or ships or aircraft by a
corporation organized in a Contracting Party and engaged in the international
operation of a ship or ships or aircraft shall be exempt from tax by the other
Contracting Party.
2. In order for a corporation organized in a Contracting Party to claim benefits
under this agreement, it must satisfy any ownership or public trading
requirements, as well as any filing requirements, of the other Contracting Party.
3. Corporations of a Contracting Party engaged in the international operation of
aircraft include those airlines designated under the Air Transport Agreement
between the Contracting Parties or whose flights are otherwise authorized by the
civil aviation authority of the receiving Contracting Party.
6
Article IV
CONSULTATION. SETTLEMENT OF DISPUTES AND
AMENDMENT PROCEDURE
1. Consultation may be requested in writing at any time by either Contracting Party.
Such consultation shall commence within sixty (60) days of the date of such
written request.
2. The competent authorities of the Contracting Parties shall endeavor to resolve
by mutual agreement any dispute regarding the interpretation or application of
this Agreement and shall not refer any such dispute to any international tribunal
or third party for settlement.
3. This Agreement may be amended by written agreement of the Contracting
Parties.
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Article V
ENTRY INTO FORCE
1 The Contracting Parties shall notify each other in writing through diplomatic
channels when their respective legal procedures for entry into force have been
met with respect to this Agreement.
2. The Agreement shall enter into force as of the date of the latter of the
notifications required pursuant to paragraph 1 of this Article V and the provisions
of this Agreement shall have effect with respect to all taxable years beginning on
or after January 1, 1999, and to all prior open taxable years.
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Article VI
TERMINATION
This Agreement may be terminated by either Contracting Party giving written notice
of termination through diplomatic channels or as a consequence of a legislative act by a
Contracting Party. In the case of termination by written notice through diplomatic
channels, the Agreement shall cease to have effect for taxable periods beginning on or
after 1 January of the calendar year next following the date on which notice of termination
was given. If this Agreement is terminated as a consequence of any legislative act, the
Contracting Party concerned shall give as much notice of termination as feasible and such
termination shall take effect as determined by such legislative act.
IN WITNESS WHEREOF, the undersigned being duly authorized by their respective
Governments, have signed the present Agreement.
DONE at Riyadh this eleventh day of December one thousand nine hundred and
ninety-nine, corresponding to the third day of Ramadan, one thousand four hundred and
twenty, in the Arabic and English languages.
FOR THE GOVERNMENT OF THE
UNITED STATES OF AMERICA:
Wyche Fowler, Jr.
United States Ambassador
to the Kingdom of Saudi Arabia
FOR THE GOVERNMENT OF THE
KINGDOM OF SAUDI ARABIA:
Dr. Ibrahim Abdulaziz Al-Assaf
Minister of Finance and
National Economy



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