Article 28. EXCHANGE OF IN­

FORMATION

This article provides for a system of administrative cooperation between the competent authorities of the two States and specifies conditions under which information may be exchanged to facilitate the administration of the proposed Convention and of the do­ mestic laws of the Contracting States concerning taxes to which the pro­ posed Convention relates. This lan­ guage permits the competent authori­ ties to exchange information in connection with tax compliance gen­ erally, not merely illegal acts or crimes.

Information exchanged is treated as secret and may not be disclosed to any persons other than those (including a court or administrative body) con­ cerned with the assessment, collection, enforcement, or prosecution of taxes subject to the proposed Convention, but this does not prohibit disclosure as part of a public court proceeding. In no case does this article impose an obligation on a State to disclose trade secrets or similar information or to carry out administrative measures or supply particulars where such action would be at variance with the laws or administrative practice of either State, or contrary to public policy. In gen­ eral, the standard for the exchange of information is the standard used by the States in the enforcement of their own laws by administrative and judi­ cial authorities.

The proposed Convention also pro­ vides (as the existing Convention does not) that the competent authority of

each State will advise the competent authority of the other State of any addition to or amendment of tax laws which concern the imposition of taxes which are the subject of the proposed Convention. It is further provided that the competent authority of each State will exchange the texts of all published material interpreting the proposed Convention under the laws of the respective States, whether in the form of regulations, rulings, or ju­

tions. To remedy this, the proposed Convention provides that the Nor­ wegian tax on a Norwegian perma­

nent establishment of a United States corporation will be computed as if the permanent establishment were a Nor­ wegian corporation which distributed

to its United States shareholders, own­ ing at least 10 percent of its voting stock, the same percentage of its prof­ its as the United States corporation maintaining the permanent establish­ ment distributes to its shareholders from its total profits. Thus, if a United States corporation with a perma­ nent establishment in Norway distrib­ utes 20 percent of its total income to its shareholders, the permanent estab­ lishment will be taxed in Norway as if it were a Norwegian corporation which had distributed 20 percent of its profits. Thus its tax on the 20 per­ cent of profits deemed distributed will be at the lower rate plus the 10 per­ cent withholding tax on dividends which would have been paid if the 20 percent had actually been distributed by a Norwegian corporation.