Article 4 (Resident). Thus — U.S. Income Tax Treaty

not a U.S. citizen is a resident of the United States under the
Code (e.g., a "green card" holder), and is also a resident of

Turkey under Turkish law, and if that individual has a permanent

home available to him in Turkey and not in the United States, he

would be treated as a resident of Turkey under the tie-breaker

rules of paragraph 2 of Article 4. This result would apply for

purposes of the saving clause, and the United States therefore
would not be permitted to apply its statutory rules to that
person if those rules are inconsistent with the Convention.

   The following example illustrates the operation of the
saving clause. If a Turkish resident (as defined in Article 4)

performs independent personal services in the United States, the

individual is present in the United States for a period of no
more than 183 days in a continuous 12 month period, and the
income from the services is not attributable to a fixed base in
the United States, Article 14 (Independent Personal Services)
would normally prevent the United States from taxing the income.

If, however, the Turkish resident is also a citizen of the United

States, the saving clause permits the United States to include
the remuneration in the worldwide income of the citizen and
subject it to tax under the normal Code rules.

Under paragraph 3, the United States also reserves its right

to tax former U.S. citizens whose loss of citizenship had as one
of its principal purposes the avoidance of U.S. tax. Such a
former citizen is taxable in accordance with the provisions of
section 877 of the Code for 10 years following the loss of
citizenship.

   Paragraph 4

   Paragraph 4 sets forth exceptions to the saving clause in
cases where its application would undermine Convention benefits
that are intended to be available to residents of a Contracting
State and to citizens of the United States. Under subparagraph
a), for example, U.S. residents and citizens are entitled to
certain U.S. benefits provided under the Convention. Those

benefits are: (1) Paragraph 2 of Article 9 (Associated Enterpris

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TURKEY 192 Supp. No. 6(1998)

es), which grants the right to a correlative adjustment and, in
particular, consistent with the provisions of Article 25 (Mutual
Agreement Procedure), permits the override of the statute of
limitations for the purpose of refunding tax under such a corre
lative adjustment; (2) Paragraph 2 of Article 18 (Pensions and
Annuities), which calls for exclusive source State taxation of
social security benefits; (3) Article 23 (Relief from Double
Taxation), which confers the benefit-of double taxation relief by
a Contracting State on its citizens and residents (to apply the
saving clause to this Article would render the Article meaning
less); (4) Article 24 (Non-Discrimination), which prevents a
Contracting State from denying certain deductions to its resi

dents or from applying other or more burdensome tax treatment to its enterprises that are owned by residents of the other State than it applies to other similar enterprises; and (5) Article 25

(Mutual Agreement Procedure), which may confer benefits, such as
a waiver of the statute of limitations on refunds, by a State
with respect to its citizens and residents.

   Subparagraph 4 b) provides a different set of exceptions to
the saving clause for certain benefits available to persons who
are neither citizens nor lawful permanent residents (e g., U.S.

"green card" holders) of a Contracting State but who remain in

that State long enough to become residents under its law. The
benefits preserved by this subparagraph are the host country
exemptions for the following items of income: government service
salaries and pensions under Article 19 (Government Service);
certain income of students, apprentices and teachers under
Article 21 (Students, Apprentices, and Teachers); and the income
of diplomatic and consular officers under Article 27 (Members of
Diplomatic Missions and Consular Posts).

Paragraph 5

   Paragraph 5 of Article 1 specifically relates to nondiscrim
ination obligations of the Contracting States under other agree

ments. The provisions of paragraph 5 are an exception to the

rule provided in paragraph 2 b) of this Article under which the
Convention shall not restrict in any manner any exclusion,

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TURKEY 193 Supp. No. 6(1998)

exemption, deduction, credit, or other allowance now or hereafter
accorded by any other agreement between the Contracting States.

Subparagraph a) of paragraph 5 provides that, notwithstand

ing any other agreement to which the Contracting States may be
parties, a dispute concerning whether a measure is within the
scope of this Convention shall be considered only by the compe

tent authorities of the Contracting States, and the procedures

under this Convention exclusively shall apply to the dispute.

Thus, procedures for dealing with disputes that may be incorpo

rated into trade, investment, or other agreements between the
Contracting States shall not apply for the purpose of determining
the scope of the Convention.

   Subparagraph b) of paragraph 5 provides that, unless the
competent authorities determine that a taxation measure is not
within the scope of this Convention, the nondiscrimination
obligations of this Convention exclusively shall apply with
respect to that measure, except for such national treatment or

most-favored-nation ("MFN") obligations as may apply to trade in goods under the General Agreement on Tariffs and Trade ("GATT"). No national treatment or MFN obligation under any other agreement

shall apply with respect to that measure. Thus, unless the competent authorities agree otherwise, any national treatment and

MFN obligations undertaken by the Contracting States under

agreements other than the Convention shall not apply to a taxa tion measure, with the exception of GATT as applicable to trade

in goods.

Subparagraph c) of paragraph 5 defines a "measure" broadly. It would include, for example, a law, regulation, rule, proce dure, decision, administrative action, or any other similar

provision or action.