ARTICLE 1

Taxes Covered

Paragraph (1) designates the taxes of the Contracting States which are the subject of the Convention. With respect to the United States, the subject taxes are the Federal income taxes imposed by the Internal Revenue Code ("Code"). The United States taxes imposed under Code sections 531 (accumulated earnings tax) and 541 (personal holding company tax) are excluded, thus preserving for the United States the right to impose these taxes.

United States taxes not generally covered by the Convention include the estate, gift, and generation skipping transfer taxes, the Windfall Profits Tax, Federal unemployment taxes and social security taxes imposed under sections 1401, 3101 and 3111 of the Code.

In the case of Egypt, paragraph (1) provides that the Convention applies to the tax on income derived from immovable property (including the land tax, the building tax and the ghaffir tax); the tax on income from movable capital; the tax on commercial and industrial profits; the tax on wages, salaries, indemnities and pensions; the tax on profits from liberal professions and all other noncommercial professions; the general income tax; the defense tax; the national security tax; the war tax; and all supplementary taxes imposed as a percentage of any of the previously mentioned taxes.

Pursuant to paragraph (2), the Convention will also apply to taxes substantially similar to those covered by paragraph (1) which are imposed in addition to, or in place of, existing income taxes, after August 24, 1980, (the date of signature of the Convention).

Under paragraph (3), for purposes of Article 26 (Nondiscrimination), the Convention applies to taxes of every kind imposed at the national, state, or local level; and for purposes of Article 28 (Exchange of Information), the Convention applies to taxes of every kind imposed at the national level.

Paragraph (4) provides that the competent authority of each Contracting State will promptly notify the competent authority of the other Contracting State of any amendment of the tax laws referred to in paragraph (1), or of the adoption of substantially similar taxes imposed in addition to, or in place of, those taxes by transmitting the texts of such amendments or statutes. Paragraph (5) provides for a similar exchange with respect to the publication of official material concerning the application of the Convention, whether in the form of regulations, rulings or judicial decisions