United States-Egypt 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, a Convention between the Government of the United States of America and the Government of the Arab Republic of Egypt for the avoid. ance of double taxation and the prevention of fiscal evasion with respect to taxes on income, (the Convention) signed at Cairo on August 24, 1980. I transmit also the report of the Department of State with respect to the Convention.

The Convention will replace the income tax convention with Egypt which was signed in 1975. I therefore, desire to withdraw from the Senate the following treaty, removing it from the Treaty Calendar:

Convention between the Government of the United States of America and the Arab Republic of Egypt for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, signed at Washington on October 28, 1975 (Executive D, 94th Cong., 2d Sess.).

The Convention is similar to the United States model in major respects although different in form and pattern as the model was published after the negotiations of the convention had begun. As in the model, business profits of a resident of one country may be taxed by the other only if such profits are attributable to a permanent establishment in the other country. Similarly, with respect to independent personal service income, an individual who is a resident of one State may be taxed by the other State only if certain tests are met. In the Convention, the time threshold is shorter than in the United States model, and, with respect to entertainers, the dollar threshold is lower.

Maximum rates of tax are established on a reciprocal basis for the taxation by the source country of dividends, interest, and royalties. In general, these maximum rates in the Convention exceed the rates specified in the United States model. The rates in the Convention are, however, consistent with those established in other United States tax conventions with developing countries.

I recommend that the Senate give early and favorable consideration to the Convention,

JIMMY CARTER

The White House,

November 12, 1980.