Article 6. GENERAL RULES OF TcAX TION

Under paragraph (1), a resident of one Contracting State may be taxed by the other Contracting State on any income from souces within that other Contracting State and only on such income, subject to the limitations set forth in the Convention. For this purpose, the source rules contained in Article 4 (Source or Income) are to be applied. However, if the resident ls a citizen of the other Contracting State, that Contracting State may tax the resident without regard to this paragraph because or the saving clause of paragraph (3).

Paragraph (2) contains the customary rule that the Convention will not restrict in any manner any exclusion, exemption, deduction, credit, or other allowance now or hereafter accorded by the laws of a Contracting State in the determination of tax Imposed by it, or by any othe; agreement

between the Contracting States. This rule renects the principle that a convention should not increase the tax burden on residents of the Contract­ ing States.

Paragraph (3) contains the traditional saving clause under which the United States reserves the right to tax its citizens and residents as i! the Convention had not come lnto effect. However, because of paragraph (4), the saving clause does not apply In several cases ln which its applica­ tion would contravene policies reflected in the Convention which are

specifically designed to extend treaty benefits to citizens or residents. Thus, the saving clause does not affect the provisions with. respect to social security payments, relief from double taxation, nondiscrimina­ tion, or the mutual agreement procedure. Moreover, the saving clause does not affect the benefits of the Convention which are conferred upon individuals performing governmental functions, teachers, students, trainees, and diplomatic or consular officers who are neither citizens of, nor have immigrant status in, the ContractinÎ State conferring such benefits, In the case of the United States, 'immigrant status" means the individual has been admitted to the United States for perma­ nent residence. The saving clause is reciprocal,

Paragraph (5) authorizes the competent authorities of the Contract­ ing States to prescribe regulations necessary to carry out the provisions of the Convention. Cn the United States slde, this authority is also provided by Code section 7805.