United States-Jamaica Convention on Taxation and Fiscal Evasion Message to the Senate Transmitting the Convention.

To the Senate of the United States:

I transmit herewith, for the advice and consent of the Senate to ratification, a Convention between the Government of the United States of America and the Government of Jamaica for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the Convention), together with a related exchange of notes, signed at Kingston on May 21, 1980. I also transmit the report of the Department of State with respect to the Convention.

In general, the Convention follows the pattern of the United States model income tax convention, although there are some accommodations to Jamaica's status as a developing country. For example, business profits of an enterprise of one country, as in the model convention, may be taxed by the other only if they are attributable to a permanent establishment in the other country. In the proposed Convention, however, the definition of a permanent establishment is more broadly drawn. Similarly, in the United States model, an individual who is a resident of one State may be taxed by the other on income from personal services performed in the other State only if certain thresholds are passed, but in the proposed Convention, the time threshold is shorter for independent services and a dollar threshold has been added.

The exchange of notes sets forth certain understandings between the two Governments. It deals, among other matters, with the conditions under which the United States would allow a foreign tax credit for Jamaican income taxes on bauxite profits. The exchange of notes also confirms the fact that the Convention has been designed to cover a substitute tax which may be imposed by Jamaica "in lieu of" the corporate income tax on such profits if such substitute tax meets the requirement of section 903 of the Internal Revenue Code.

I recommend that the Senate give early and favorable consideration to the Convention and its advice and consent to ratification.

JIMMY CARTER

The White House,

August 4, 1980.