ARTICLE 29

Termination

1. This Agreement shall continue in effect indefinitely but either Contracting State may, on or before June 30 in any calendar year after the year 1988, give notice of termination to the other Contracting State and in such event this Agreement shall cease to have effect:

a) in the United States:

(i) in respect of taxes withheld at source on amounts paid or credited to nonresidents on or after the first day of January in the calendar year next following that in which the notice is given: and

(ii) in respect of other United States tax, for taxable years beginning on or after the first day of January in the calendar year following that in which the notice is given; b) in Barbados:

(i) in respect of income tax, corporation tax, tax on branch profits and tax on premium income of insurance companies for the income year beginning the first day of January in the calendar year next following that in which such notice is given; and

(ii) in respect of the petroleum wining operations tax, for any accounting period beginning on or after the first day of January in the calendar year next following that in which such notice is given.

DONE at Bridgetown in duplicate, this 31st day of December, 1984.

FOR THE GOVERNMENT FOR THE GOVERNMENT OF OF BARBADOS: THE UNITED STATES OF AMERICA: (s) Louis R. Tull (s) Kenneth A. Kurze

NOTES OF EXCHANGE

The American Charge d'Affaires ad interim to the Barbadian Minister of Foreign Affairs

EMBASSY OF THE UNITED STATES OF AMERICA

Bridgetown, Barbados

No.1001

December 31, 1984

The Honorable Louis R. Tull, M.P., Minister of Foreign Affairs and Attorney-General Barbados.

EXCELLENCY: I have the honor to refer to the Convention between the United States of America and Barbados for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, signed today. The following understandings were reached between the two Governments:

(1) In the process of negotiating this Convention, the delegation of Barbados emphasized the necessity of including in the Convention additional provisions which would create incentives to promote the flow of United States investment to Barbados.

The United States Delegation is not able to accept such a provision at this time. I wish, however to assure you that my Government realizes the importance your Government attaches to the increase of United States investment in Barbados. Should circumstances change, our Government would be prepared to reopen the discussions in order to reflect in this Convention provisions which would minimize the conflicts between the United States tax system and the incentives offered by the Government of Barbados to promote foreign investment in Barbados and which are consistent with the income tax policies of the United States, including tax convention policies, with respect to other developing countries.

(2) During the course of the negotiation of this Convention, the delegation of Barbados sought agreement to include in the Convention a provision which would treat as charitable contributions for tax purposes, gifts by a resident of one Contracting State to a charitable organization in the other.

The United States delegation cannot agree to such a provision at this time. I wish, however, to assure you that my Government appreciates the potential benefits of such a provision to the cultural and economic development of Barbados. If, in the future, United States policies in this regard should change, and the provision by the United States of such benefits by treaty to United States persons should become acceptable, the United States would be prepared to reopen discussions with a view to incorporating into the Convention such a provision.

I have the honor to propose to you that the present Note and your reply thereto constitute the agreement of our two Governments on these understandings.

Accept, Excellency, the assurances of my highest consideration.

Kenneth A. Kurze Charge d'Affaires a.i.

The Barbadian Minister of Foreign Affairs to the American Charge d'Affaires ad interim

MINISTRY OF FOREIGN AFFAIRS.

MARINE HOUSE. BARBADOS

Date: December 31, 1984.

Mr. Kenneth A. Kurze Charge d'Affaires a.i. Embassy of the United States of America Canadian Imperial Bank of Commerce Building Broad Street BRIDGETOWN.

Sir,

I have the honour to refer to your Note of December 31, 1984, which reads as follows:

“EXCELLENCY: I have the honor to refer to the Convention between the United States of America and Barbados for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, signed today. The following understandings were reached between the two Governments:

(1) In the process of negotiating this Convention, the delegation of Barbados emphasized the necessity of including in the Convention additional provisions which would create incentives to promote the flow of United States investment to Barbados.

The United States Delegation is not able to accept such a provision at this time. I wish, however to assure you that my Government realizes the importance your Government attaches to the increase of United States investment in Barbados. Should circumstances change, our Government would be prepared to reopen the discussions in order to reflect in this Convention provisions which would minimize the conflicts between the United States tax system and the incentives offered by the Government of Barbados to promote foreign investment in Barbados and which are consistent with the income tax policies of the United States, including tax convention policies, with respect to other developing countries.

(2) During the course of the negotiation of this Convention, the delegation of Barbados sought agreement to include in the Convention a provision which would treat as charitable contributions for tax purposes, gifts by a resident of one Contracting State to a charitable organization in the other.

The United States delegation cannot agree to such a provision at this time. I wish, however, to assure you that my Government appreciates the potential benefits of such a provision to the cultural and economic development of Barbados. If, in the future, United States policies in this regard should change, and the provision by the United States of such benefits by treaty to United States persons should become acceptable, the United States would be prepared to reopen discussions with a view to incorporating into the Convention such a provision.

I have the honor to propose to you that the present Note and your reply thereto constitute the agreement of our two Governments on these understandings.

Accept, Excellency, the assurances of my highest consideration.”

The Government of Barbados agrees with the contents of your Note above, which together with this Note shall constitute an agreement between the Governments of Barbados and the United States of America in this matter

Accept, Sir, the assurances of my highest consideration

LOUIS R. TULL Minister of Foreign Affairs.

PROTOCOL

PROTOCOL AMENDING THE 1984 INCOME TAX CONVENTION WITH BARBADOS

MESSAGE

FROM

THE PRESIDENT OF THE UNITED STATES

TRANSMITTING

THE PROTOCOL AMENDING THE CONVENTION BETWEEN THE UNITED STATES

OF AMERICA AND BARBADOS FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME SIGNED ON DECEMBER 31, 1984, WHICH PROTOCOL WAS SIGNED AT WASHINGTON

ON DECEMBER 18, 1991

LETTER OF SUBMITTAL (PROTOCOL)

DEPARTMENT OF STATE, Washington, September 22,1992.

The PRESIDENT, The White House.

I have the honor to submit to you, with a view to its transmission to the Senate for advice and consent to ratification, the Protocol Amending the Convention Between the United States of America and Barbados for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income signed on December 31, 1984, which Protocol was signed at Washington on December 18, 1991.

In addition, I transmit herewith, for the information of the Senate, Understandings Regarding the Scope of the Limitation on Benefits Article in the U.S.-Barbados Protocol. Although not submitted for the advice and consent of the Senate to ratification, this document is relevant to the consideration of the Protocol by the Senate.

The Protocol amends the 1984 income tax Convention with Barbados which has been in force since February 28, 1986 to modify certain provisions of the Convention.

The most significant provisions of the Protocol reflect a basic alteration of Barbadian treaty policy. The present Convention incorporates a typical developing country approach, based on the United Nations Model Convention, which is to minimize revenue losses of the developing country partner, by having very low activity thresholds for taxing permanent establishments and relatively high withholding rates on interest and royalties.

The Protocol, reflecting Barbadian recognition that these policies can inhibit the flow of capital and technology to Barbados, includes substantially reduced withholding taxes on interest and royalties, and

more restrictive limitations on the taxation by one country of the business profits earned by a resident of the other.

The Protocol also contains provisions which deny treaty benefits with respect to dividends and interest paid by certain United States investment companies. Although the present Convention does not prohibit the application of the U.S. branch tax, which was enacted subsequent to the signature of the 1984 treaty, it does not provide rules for its application. The Protocol includes a new article providing for the imposition of a branch tax both in the United States and Barbados.

Additionally, the Protocol replaces the anti-treaty-shopping rules of the 1984 treaty with a flexible set of rules modeled on the recent United States-German tax treaty. The Protocol is accompanied by Understandings Regarding the Scope of the Limitation on Benefits Article in the U.S.-Barbados Protocol which provide guidance to taxpayers and to tax authorities on the proper interpretation of the rules.

A technical memorandum explaining in detail the provisions of the Protocol is being prepared by the Department of the Treasury and will be submitted to the Senate Committee on Foreign Relations.

The Department of the Treasury, with the cooperation of the Department of State, was primarily responsible for the negotiation of the Protocol. It has the full approval of both Departments.

Respectfully submitted,

FRANK G. WISNER. Attachments: As stated.

LETTER OF TRANSMITTAL (PROTOCOL)

THE WHITE HOUSE, September 30, 1992.

To the Senate of the United States:

I transmit herewith for Senate advice and consent to ratification the Protocol Amending the Convention Between the United States of America and Barbados for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income signed on December 31, 1984, which protocol was signed at Washington on December 18, 1991. I also transmit for the information of the Senate the Report of the Department of State.

In addition, I transmit herewith, for the information of the Senate, Understandings Regarding the Scope of the Limitation on Benefits Article in the U.S.-Barbados Protocol. Although not submitted for the advice and consent of the Senate to ratification, this document is relevant to the consideration of the protocol by the Senate.

The protocol amends the 1984 income tax convention with Barbados, which has been in force since February 28, 1986, to modify certain provisions of the convention.

I recommend that the Senate give early and favorable consideration to the protocol and give its advice and consent to ratification.

GEORGE BUSH.

NOTES OF EXCHANGE (PROTOCOL)

DEPARTMENT OF STATE, Washington, December 18, 1991.

His Excellency Sir WILLIAM DOUGLAS, Ambassador of Barbados.

Excellency: I have the honor to refer to the Protocol signed today amending the Convention between the United States of America and Barbados for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and inform you on behalf of the Government of the United States of America of the following:

During the negotiations leading to the conclusion of the Protocol signed today, the negotiators developed an agreed Memorandum of Understanding intended to give guidance both to taxpayers and tax authorities of our two countries in interpreting Article 22 (Limitation on Benefits). The guidance represents the current views of our two countries with respect to Article 22. Future developments, including experience in administering the Convention as amended by the Protocol, and Article 22, may lead the competent authorities to develop and publish further developments and understandings.

If this position meets the approval of the Government of Barbados, this Note and your Note in reply thereto will indicate that our Governments share a common understanding of the role of the Memorandum of Understanding relating to the Protocol.

Accept, Excellency, the expression of my highest consideration.

EUGENE J. MCALLISTER (For the Acting Secretary of State).

EMBASSY OF BARBADOS Washington, DC, December18, 1991 .

Hon. JAMES BAKER III, Secretary of State, Department of State, Washington, D.C.

Excellency, I have the honour to refer to the Protocol signed today amending the Convention between the United States of America and Barbados for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on Income and to inform you on behalf of the Government of Barbados of the following:

During the negotiations leading to the conclusion of the Protocol signed today, the negotiators developed an agreed Memorandum of Understanding intended to give guidance both to taxpayers and tax authorities of our two countries in interpreting Article 22 (Limitation on Benefits). The guidance represents the current views of our two countries with respect to Article 22. Future developments, including experience in administering the Convention as amended by the Protocol, and Article 22, may lead the competent authorities to develop and publish further developments and understandings.

This position meets the approval of the Government of Barbados and this Note in reply indicates that our Governments share a common understanding of the role of the Memorandum of Understanding relating to the Protocol.

Accept, Excellency, the expression of my highest consideration.

Dr. RUDI WEBSTER,

Ambassador.

PROTOCOL AMENDING THE CONVENTION BETWEEN THE UNITED STATES OF AMERICA AND BARBADOS FOR THE AVOIDANCE OF DOUBLE TAXATION AND

THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

SIGNED ON DECEMBER 31, 1984

The United States of America and Barbados, desiring to conclude a Protocol to amend the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed on December 31, 1984, (hereinafter referred to as “the Convention”) have agreed as follows: