Article 23 (Relief from Double Taxa­

tion) which, among other things, pro­ vides that a foreign tax credit will be allowed by the United States, such profits are considered to be from

only if the property or rights giving rise to such income, dividends, inter­ est, royalties, or capital gains is effec­ tively connected with a permanent es­ tablishment.

Paragraph (6) (b) of this article also contains a rule for determining whether property or rights are effec­ tively connected with a permanent es­ tablishment. Factors to be taken into account include whether the rights or property are used in or held for use in carrying on industrial or commercial activity through a permanent estab­ lishment and whether the activities carried on through such permanent establishment were a material factor in the realization of the income de­ rived from such property or rights.

This article is substantially similar to the business profits article of the OECD Model Convention except that the Model Convention does not con­ tain a definition of either the term “industrial or commercial activity” or “industrial or commercial profits,” nor does the Model Convention contain a rule dealing with whether property or rights are effectively connected with a permanent establishment.