to the possessions of the United States or the Commonwealth or Puerto

Rico. The term "United States" also includes the territorial sea and. as provided in section 638 of the Code, the continental shelf or the United States. The term "Philippines" means the Republic of the Philippines. When used ln a geographical sense. the term means the territory compris­ ing the Republic of the Philippines.

The term "Contracting State" is defined to mean the United States or the Philippines as the context requires.

The term "person" includes an individual, a partnership. or cor­ poration. an estate or a trust.

The term "United States corporation" is defined as a corporation. or any unincorporated entity which is treated as a corporation f'or United States tax purposes. which is created or organized ln or under the laws of the United States, any state thereof, or the District of Colwnbia. A "Philippine corporation" is defined as a corporation. or any unincorporated entity which is treated as a corporation f'or Philip­ pine tax purposes. which is created or organized in the Philippines or under its laws. Under section 840:>) of the Philippine Code. the term "corporation" includes partnerships. no matter how created or organized, other than general professional partnerships. A general professional partnership is formed for the sole purpose of exercising a common profession, no part of the income of which is derived from engaging in a trade or business. Thus. a partnership formed in the United States which is engaged in a trade or business in the Philippines is considered to be a corporation f'or Philippine tax purposes. Nonetheless. f'or pur­ poses of the Treaty. that partnership will not be considered to be a Philippine corporation within the meaning of paragraph (l )(e)(ii) since . it was not created or organized in or under the laws of the Philippines.

With respect to the United States, the term "competent authority" means the Secretary of the Treasury or his delegate. With respect to the Philipr,ines. it means the Secretary of Finance or his delegate. The term "tax ' means those taxes imposed by the United States or the Philippines to which the Convention applies by virtue of Article l (Taxes Covered). However, as provided in paragraph (4) of Article 24 <Nondis­ crimination), the term "taxes" or "taxation" means. for purposes of that article. taxes or taxation of every kind imposed at the national • state. or local level.

The term "international traffic" is defined as any transport by a ship or aircraft operated by a resident of one of the Contracting States except where such transport is confi,ned solely between places within a Contracting

State. Thus, for example, coastal shipping along the Atlantic coast of the United States Is not international traffic. However, it a ship operated by a resident of the Philippines transports goods from Canada to the

United States, leaving some o! the good» in San Francisco and the remainder ln San Diego, the portion o! the voyage between San Francisco and San Diego ls international tramc.

Paragraph (2) provides that any term used In the Convention which ls not defined therein shall, unless the context otherwise requires, have the meaning which it has under the laws of the Contracting State whose tax is being determined. However, where a term has a different meaning under the laws of the Philippines and the United States or where the meaning under the laws of one of the Contracting States is not readily deter­ minable, the competent authorities may for purposes of the Convention establish a common meaning ln order to prevent double taxation or to further any other purpose of the Convention.