Article 1, TAXES COVERED

Paragraph (1) designates the taxes of the Contracting States which are subject to the Convention with respect to the United States, the subject taxes are the Federal income taxes imposed by the Internal Revenue Code ("Code"), but not including sections 53Ċ (accU111ulated earnings tax) and 541 (personal holding company tax). The Convention only applies to taxes on income contained in the Internal Revenue Code. Thus, the Convention does not, for example, apply to the excise tax under Code section 1491. Also the Convention does not apply to U.S. social security taxes and the Federal unemployment tax.

In the case of the Philippines, paragraph (1) provides that the Con• vention applies to the income tax imposed by Title II of the National Internal Revenue Code ("Philippine Code"), but not including taxes im• posed under sections 25 (additional tax on improperly accumulated earnings) and 63 (personal holding company tax),

Pursuant to paragraph (2), the Convention '\111 also apply to taxes substantially similar to those covered by paragraph (1) which are imposed ln addition to, or in place of, existing Income taxes, after October 1, 1976, (the date of signature of the Convention).

Paragraph (3) provides that the competent authority of each Contract• ing State will notify the competent authority of the other Contracting State of any amendment of the tax laws referred to in paragraph (1) or (2), and of the adoption of substantially similar taxes imposed ln addition to, or in place of, the taxes referred to in paragraph (1), by transmitting the texts of such amendments or statutes at least once a year. Paragraph

(4) provides for a similar &Mual exchange with respect to the publication of material concerning the application of the Convention, '\'hether in the form of reeulations, rulings or judicial decisions.