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

To the Senate of the United States:

I transmit, herewith, for Senate advice and consent to ratification, the Convention between the Government of the United States of America and the Government of the Hungarian People's Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, signed at Washington February 12, 1979. For the information of the Senate, I also transmit the report of the Department of State with respect to the Convention.

This Convention is the first income tax convention to be negotiated between the United States and the Hungarian People's Republic. It is intended to facilitate economic relations and the exchange of scholars between the two countries by removing tax obstacles to the flow of investment and the travel of persons.

The Convention follows closely the United States model income tax convention and the 1977 model convention of the Organization for Economic Cooperation and Development (OECD). It clarifies taxing rules, reduces or waives the tax at source on investment income and income from limited business or employment activities, ensures nondiscriminatory taxation and provides for administrative cooperation between the tax authorities of the two countries to avoid double taxation and to prevent fiscal evasion with respect to taxes on income. An accompanying exchange of notes clarifies some technical points and includes some administrative provisions.

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

JIMMY CARTER

The White House,

May 9, 1979.