ARTICLE 32

Termination

This Convention shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate the Convention at any time after 5 years from the date on which this Convention enters into force provided that at least 6 months' prior notice of termination has been given through diplomatic channels. In such event, the Convention shall cease to have force and effect as respects income of taxable years beginning (or, in the case of withholding taxes and social security

taxes, payments made) on or after January 1 next following the expiration of the 6-month period.

DONE at SEOUL in duplicate in the English and Korean languages this 4th day of June 1976.

FOR THE UNITED STATES OF AMERICA:

RICHARD L. SNEIDER

FOR THE REPUBLIC OF KOREA:

PARK TONG-JIN.

NOTES OF EXCHANGE

EMBASSY OF THE UNITED STATES OF AMERICA

Seoul, June 4, 1976

No.152

His Excellency PARK TONG-JIN, Minister of Foreign Affairs, Seoul.

EXCELLENCY: I have the honor to refer to the Income Tax Convention signed between the Governments of Korea and the United States. During the course of the negotiations leading up to the signed Convention, the Korean representatives (A) stressed the need for increased provisions in the Convention that would constitute special incentives to promote the flow of United States capital and technology to Korea and (B) stated that the Convention applies to the Korean Defense Tax imposed in connection with the taxes referred to in Article 1(1) of the Convention.

The United States delegation was unable to agree to provisions for special investment incentives, but I want to assure you that my Government recognizes the importance which your Government places on increased investment in Korea. Accordingly, when circumstances permit, my Government will be prepared to resume discussions with a view to incorporating provisions into this Convention that will minimize the interference of the United States tax system with incentives offered by the Government of the Republic of Korea and that will be consistent with the income tax policies of the United States Government regarding other developing countries.

I should appreciate your confirmation that the Government of the Republic of Korea interprets the words "Korean Tax" in Article 1 (1) as including the Korean Defense Tax assessed on the taxes referred to therein.

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

RICHARD L. SNEIDER

I, the undersigned Foreign Service Officer of the United States of America, duly commissioned and qualified, do hereby certify that this document is a true and faithful copy of the original signed by Richard L. Sneider.

GORDAN J. DUGAN.

MINISTRY OF FOREIGN AFFAIRS

Seoul, June 4, 1976.

His Excellency RICHARD L. SNEIDER, Ambassador Extraordinary and Plenipotentiary of the United States of America to the Republic of Korea.

EXCELLENCY: I have the honor to acknowledge the receipt of your Excellency's Note dated June 4, 1976 with regard to increased investment of the United States in Korea and with regard to the application of the Tax Convention to the Korean Defense Tax imposed in connection with the taxes referred to in Article 1(1) of the Convention.

I have further the honor to note that the United States will be prepared, when circumstances permit, to resume discussions with a view to incorporating provisions into the Convention that will minimize the interference of the U.S. tax system with incentives offered by the Government of Korea and that will be consistent with the income tax policies of the United States Government regarding other developing countries.

I also have the honor to confirm that the definition of Korean tax in Article 1 (1) of the Tax Convention includes the Korean Defense Tax assessed on the taxes referred to therein.

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

T. JIN PARK Minister of Foreign Affairs