Article 28. ENTRY INTO FORCE

This Article provides the rules for bringing the Convention into force and giving effect to its provisions. Paragraph 1 provides for the ratification of the Convention by both Contracting States and the prompt exchange of instruments of ratification.

Paragraph 2 provides that the Convention will enter into force on the date on which instruments of ratification are exchanged. The Convention will have effect with respect to taxes withheld at source on dividends, interest and royalties for amounts paid or credited on or after the first day of the second month following the month in which the Convention enters into force. For example, if the Convention were to enter into force on July 1, 1995, the withholding rates on dividends, interest and royalties would be reduced (or eliminated) for amounts paid on or after September 1, 1995. For all other income taxes, the Convention will have effect for taxable periods beginning on or after January 1 of the year in which the Convention enters into force.

The 1973 Convention will cease to have effect when the provisions of this Convention take effect. Point 10 of the Protocol provides that a person entitled to the benefits of the Convention may elect to continue to apply any legal rules under the 1973 Convention for the first taxable year in which this Convention would otherwise have effect. This is a taxpayer-bytaxpayer election. This provision can be relevant, for example, to a teacher or journalist who may be entitled under the 1973 Convention, but not under this Convention, to a special exemption from tax in the host country with respect to the individual's remuneration for those services. In such a case, the individual could elect to apply all of the legal rules applicable under the 1973 Convention for the first taxable year, but he could not choose, for example, to apply the 1973 Convention rules with respect to personal service income and the rules of this

Convention with respect to dividend income. A U.S. company that has already begun to perform a construction contract or to explore for oil in Kazakhstan might also elect to apply the rules of the 1973 Convention because that Convention contains a more generous permanent establishment threshold (36 months) than does the proposed Convention (12 months). (However, the maximum benefit that such a company could obtain from the 1973 Convention is 12 additional months.)