Article 8 of the Protocol is similar to a provision in an exchange of notes signed in

connection with the signing of the prior Convention. It reflects the fact that the Italian regional tax on productive activities (IRAP) is, in part, treated as a covered tax under the Convention, thereby providing certain benefits to U.S. residents with respect to such tax, while no United States state or local taxes are covered by the treaty. The article provides that, if a U.S. state or local government should impose tax on the profits of Italian enterprises from the operation of ships or aircraft in international traffic, Italy may impose IRAP on the profits of U.S. enterprises from such activities, notwithstanding the provisions of subparagraph 2(b)(iii) of Article 2 (Taxes Covered) and Article 8 (Shipping and Air Transport) of the Convention.