ARTICLE I

The high contracting parties mutually agree that the income taxation imposed in the two States shall be subject to the following reciprocal provisions:

(a) The rate of income tax imposed by one of the contracting States, in respect of income derived from sources therein, upon individuals residing in the other State, who are not engaged in trade or business in the taxing State and have no office or place of business therein, shall not exceed 5 per centum for each taxable year, so long as an equivalent or lower rate of income taxation is imposed by the other State upon individuals residing in the former State who are not engaged in trade or business in such other State and do not have an office or place of business therein.

(b) The rate of income tax imposed by one of the contracting States, in respect of dividends derived from sources therein, upon nonresident foreign corporations organized under the laws of the other State, which are not engaged in trade or business in the taxing State and have no office or place of business therein, shall not exceed 5 per centum for each taxable year, so long as an equivalent or lower rate of income taxation on dividends is imposed by the other State upon corporations organized under the laws of the former State which are not engaged in trade or business in such other State and do not have an office or place of business therein.

(c) Either State shall be at liberty to increase the rate of taxation prescribed by paragraphs (a) and (b) of this article, and in such case the other State shall be released from the requirements of the said paragraphs (a) and (b).

(d) Effect shall be given to the foregoing provisions by both States as and from the 1st day of January, 1936.

ARTICLE II

The provisions of this convention shall not apply to citizens of the United States of America domiciled or resident in Canada.

ARTICLE III

This convention shall be ratified and shall take effect immediately upon the exchange of ratifications which shall take place at Washington as soon as possible.

Signed, in duplicate, at Washington by the duly authorized representatives of the United States of America and Canada, this 30th day of December, in the year of our Lord, one thousand nine hundred and thirty-six. For the United States of America:

For Canada:

R. WALTON MOORE, Acting Secretary of State.

NOTE.-Exchange of ratifications occurred on August 13, 1937.

TREATY WITH FRANCE

Double taxation Convention and protocol between the United States of America and France Signed at Paris, April 27, 1932; ratification advised by the Senate of the United States, June 15, 1932; ratified by the President of the United States, July 25, 1932; ratified by France, April 8, 1935; ratifications exchanged at Paris, April 9, 1935; proclaimed by the President of the United States, April 16, 1935.

BY THE PRESIDENT OF THE UNITED STATES OF AMERICA-A PROCLAMATION. Whereas a convention between the United States of America and the French Republic to regulate certain questions relative to double taxation, and a protocol relating thereto, were signed by their respective plenipotentiaries at Paris on April 27, 1932, the original of which convention and protocol, being in the English and French languages, are word for word as follows:

"The President of the United States of America and the President of the French Republic being desirous of regulating certain questions relative to double taxation, have decided to conclude a convention on that subject, and for that purpose they have appointed as their respective plenipotentiaries:

"The President of the United States of America,

"Mr. Walter E. Edge, Ambassador Extraordinary and Plenipotentiary of the United States of America to France.

"The President of the French Republic,

“M. André Tardieu, Member of the House of Representatives, President of the Council of Ministers, Minister for Foreign Affairs, Officer of the Legion of Honour,

"who, having communicated to one another their full powers found in good and due form, have agreed upon the following articles:

"ARTICLE I

"Enterprises of one of the contracting States are not subject to taxation by the other contracting State in respect of their industrial and commercial profits except in respect of such profits allocable to their permanent establishments in the latter State.

"No account shall be taken, in determining the tax in one of the contracting States, of the purchase of merchandise effected therein by an enterprise of the other State for the purpose of supplying establishments maintained by such enterprise in the latter State.

"ARTICLE II

"American enterprises having permanent establishments in France are required to submit to the French fiscal administration the same declarations and the same justifications, with respect to such establishments, as French enterprises.

"The French fiscal administration has the right, within the provisions of its national legislation and subject to the measures of appeal provided in such legislation, to make such corrections in the declaration of profits realized in France as may be necessary to show the exact amount of such profits.

"The same principle applies mutatis mutandis to French enterprises having permanent establishments in the United States.

"ARTICLE III

"Income which an enterprise of one of the contracting States derives from the operation of aircraft registered in such State and engaged in transportation between the two States is taxable only in the former State.

"ARTICLE IV

"When an American enterprise, by reason of its participation in the management or capital of a French enterprise, makes or imposes on the latter, in their commercial or financial relations, conditions different from those which would be made with a third enterprise, any profits which should normally have appeared in the balance sheet of the French enterprise, but which have been, in this manner, diverted to the American enterprise, are, subject to the measures of appeal applicable in the case of the tax on industrial and commercial profits, incorporated in the taxable profits of the French enterprise. "The same principle applies mutatis mutandis, in the event that profits are diverted from an American enterprise to a French enterprise.

"ARTICLE V

"American corporations which maintain in France permanent establishments may, in derogation of article 3 of the decree of December 6, 1872, elect to pay the tax on income from securities on three-fourths of the profits actually derived from such establishments, the industrial and commercial profits being determined in accordance with Article I.

"An American corporation which wishes to place itself under the regime of the preceding paragraph must make a declaration to that effect at the Bureau of Registration within six months after the date upon which this agreement becomes effective or within six months after the creation of its establishment in France. The election made for one establishment applies to all the establishments of such corporation. Any such election is irrevocable.

"ARTICLE VI

"An American corporation shall not be subject to the obligation prescribed by article 3 of the decree of December 6, 1872, by reason of any participation in the management or in the capital of, or any other relations with, a French corporation, if such American corporation and French corporation conform to the requirements of the present article. In such case, the tax on income from securities continues to be levied, in conformity with French legislation, on the dividends, interest and all other products distributed by the French enterprise; but it is moreover exigible, if the occasion arises, and subject to the measures of appeal applicable in the case of the tax on income from securities, on the profits which the American corporation derives from the French corporation under the conditions prescribed in Article IV.

"An American corporation which wishes to place itself under the regime of the preceding paragraph must make a declaration to that effect at the Bureau of Registration jointly with the interested French corporation, within six months after the date upon which this agreement becomes effective or within six months after the acquisition of the participation or the commencement of the relations of a nature to entail the application of article 3 of the decree of December 6, 1872. Any such election is irrevocable.

"American corporations which have not made the declaration and which are subjected to the provisions of article 3 of the decree of December 6, 1872, shall enjoy the benefits of articles 27, 28 and 29 of the French law of July 31, 1920, and article 25 of the French law of March 19, 1928, under the same conditions as French corporations.

"ARTICLE VII

"Compensation paid by one of the contracting States to its citizens for labor or personal services performed in the other State is exempt from tax in the latter State.

"ARTICLE VIII

"War pensions paid by one of the contracting States to persons residing in the territory of the other State are exempt from tax in the latter State.

"ARTICLE IX

"The following classes of income paid in one of the contracting States to a corporation of the other State, or to a citizen of the latter State residing there, are exempt from tax in the former State:

“(a) amounts paid as consideration for the right to use patents, secret processes and formulas, trade marks and other analogous rights; "(b) income received as copyright royalties;

"(c) private pensions and life annuities.

"ARTICLE X

"This agreement shall be ratified and the instruments of ratification exchanged at Paris as soon as possible.

"The agreement shall become effective on the 1st day of January following the exchange of ratifications and shall remain effective for a period of 5 years, and thereafter until 12 months from the date on which either contracting party gives notice of its termination.

"American corporations which prior to May 1, 1930, have not had their liability to tax under article 3 of the decree of December 6, 1872, finally determined, and which make the declaration prescribed in Article VI of the present convention, shall not be subject to the application of article 3 of the decree of December 6, 1872, for any years preceding the coming into force of the agreement.

"In witness whereof, the respective plenipotentiaries have signed the above articles, both in the English and French languages, and have hereunto affixed their seals.

"Done in duplicate at Paris, on the 27th of April, 1932.

"At the moment of signing the Convention on Double Taxation between the United States of America and the Republic of France, the undersigned plenipotentiaries, duly authorized by their respective Governments, have agreed, as follows:

"(1) The taxes referred to in this agreement are: "(a) for the United States:

the Federal income tax-but it is understood that Article I does not exempt from tax (1) compensation for labor or personal services performed in the United States; (2) income derived from real property located in the United States, or from any interest in such property, including rentals and royalties therefrom, and gains from the sale or the disposition thereof; (3) dividends; (4) interest.

"(b) For France:

"-in Articles I, II, III and IV, the tax on industrial and commercial profits (impôt sur les bénéfices industriels et commerciaux);

"-in Articles III, V and VI, the tax on income from securities (impôt sur les revenues des valeurs mobilières);

"-in Articles VII, VIII and IX, the tax on wages and salaries, pensions and life annuities (impôt sur les traitements et salaires, pensions et rentes viagè

res), and other schedular taxes (impôts cédulaires) appropriate to the type of income specified in said articles;

"(2) The provisions of this agreement shall not be construed to affect in any manner any exemption, deduction, credit or other allowance accorded by the laws of one of the contracting States in the determination of the tax imposed by such State.

"(3) As used in this agreement:

"(a) The term "permanent establishment" includes branches, mines and oil wells, factories, workshops, warehouses, offices, agencies, and other fixed places of business, but does not include a subsidiary corporation.

"When an enterprise of one of the States carries on business in the other State through an agent established there who is authorized to contract for its account, it is considered as having a permanent establishment in the latter State.

"But the fact that an enterprise of one of the contracting States has business dealings in the other State through a bona fide commission agent or broker shall not be held to mean that such enterprise has a permanent establishment in the latter State.

"(b) The term "enterprise" includes every form of undertaking whether carried on by an individual, partnership (société en nom collectif), corporation (société anonyme), or any other entity.

"(c) The term "enterprise of one of the contracting States" means, as the case may be, "American enterprise" or "French enterprise."

"(d) The term "American enterprise" means an enterprise carried on in the United States by a citizen of the United States or by an American corporation or other entity; the term "American corporation or other entity" means a partnership, corporation or other entity created or organized in the United States or under the law of the United States or of any State or Territory of the United States.

"(e) The term "French enterprise" is defined in the same manner, mutatis mutandis, as the term "American enterprise."

"(f) The American corporations mentioned in Articles V and VI are those which, owing to their form of organization, are subject to article 3 of the decree of December 6, 1872. The present agreement does not modify the regime of "abonnement" for securities.

"(g) The term "United States," when used in a geographical sense, includes only the States and the Territories of Alaska and Hawaii, and the District of Columbia.

"(h) The term "France," when used in a geographic sense, indicates the country of France, exclusive of Algeria and the Colonies. "Done in duplicate at Paris, the 27th of April, 1932.

"WALTER E. EDGE "ANDRE TARDIEU."

And whereas, the said convention and protocol have been ratified on both parts, and the ratifications of the two Governments were exchanged at Paris on the 9th day of April, 1935;

And whereas, it is stipulated in Article X of the said convention that the convention shall become effective on the 1st day of January following the exchange of ratifications, that is to say on the 1st day of January, 1936;

Now, therefore, be it known that I, FRANKLIN D. ROOSEVELT, President of the United States of America, have caused the said convention and the said protocol to be made public, to the end that the same and every article and clause thereof may be observed and fulfilled with good faith by the United States of America and the citizens thereof on and from the 1st day of January, 1936.

In testimony whereof, I have hereunto set my hand and caused the Seal of the United States of America to be affixed.

Done at the city of Washington this 16th day of April in the year of our Lord one thousand nine hundred and thirty-five, and of the Independ[SEAL] ence of the United States of America the one hundred and fifty-ninth. FRANKLIN D ROOSEVELT

By the President:

CORDELL HULL

Secretary of State.

EXEMPTION FROM INTERNAL REVENUE TAXES

The following list of provisions (digested) is not all inclusive, and various provisions of a more or less restricted or "local" importance have been omitted.

(A) UNITED STATES GOVERNMENT OBLIGATIONS

(Digested from Form 800-A, Revised, November 1, 1935, issued by the Commissioner of Public Debt, the 1936 edition of Treasury Annual Reports, Finance (Document No. 3079, pages 400 and 409), and Statement of the Public Debt of the United States, Form 774, July 31, 1937.)

With the exception of three small loans, which are exempt from the payment of all taxes and duties of the United States, except estate, inheritance, or gift taxes, all interest-bearing obligations of the United States now outstanding have been issued under the Second Liberty Bond Act, approved September 24, 1917, as amended, and the same Act is the present authority for the Secretary of the Treasury to borrow money through the sale of additional amounts of interestbearing obligations of the United States.

CLASSES OF SECURITIES

The following classes of securities are authorized by the Second Liberty Bond Act.

(a) Bonds of the United States, those termed Treasury bonds, bearing interest. Treasury bonds are issued with maturities more than 5 years from the date of issue, in two forms: (1) coupon (or bearer) bonds, payable to bearer, with coupons attached for the payment of interest when due; and (2) registered bonds, payable to an inscribed owner, and with interest paid through checks drawn to the order of the inscribed owner. Both forms are issued in the denominations of $50, $100, $500, $1,000, $5,000, $10,000 and $100,000 (except that the $50 denomination is not available for some of the earlier issues of Treasury bonds). Coupon and registered bonds are interchangeable for like amounts of the same issue.

(b) United States Savings bonds, are issued on a discount basis. They may be issued with maturities not less than 10 nor more than 20 years from the issue date, and at prices to yield an investment return of not over 3 percent compounded semiannually. They are redeemable at the option of holders before maturity at increasing redemption values. These bonds are issued only in registered form and in the denominations of $25, $50, $100, $500 and $1,000 (maturity value). They are not transferable.

Notes of the United States, bearing interest, with maturities not less than one nor more than five years from date of issue. These notes are termed Treasury notes, and they are issued only in coupon form payable to bearer, with coupons attached for the payment of interest when due, in denominations of $100, $500, $1,000, $5,000, $10,000, $100,000 (but the $50 denomination may be provided for some series.)

Certificates of Indebtedness, commonly termed Treasury certificates of indebtedness, bearing interest, with maturities not exceeding one year from date of issue. These certificates are issued only in coupon form payable to bearer, with coupons attached for the payment of interest when due, in denominations of $500, $1,000, $5,000, $10,000 and $100,000 (but the $100 denomination may be provided for some series).

Treasury Bills, with maturities not exceeding one year from date of issue. These bills are issued on a discount basis, and in denominations of $1,000, $10,000, $100,000, $500,000 and $1,000,000 (maturity value), payable to bearer.

TAX EXEMPTIONS

The provisions of the Second Liberty Bond Act, as amended, now in effect provide for tax exemptions of the public debt securities issued and outstanding, or issuable under that Act.

Treasury Bonds and United States Savings Bonds.-All such bonds are exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate, inheritance, or gift taxes and (b) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of such bonds the principal of which does not exceed in the aggregate $5,000 owned by any individual, partnership, association, or corporation, is exempt from the taxes provided for in subdivision (b) mentioned above. For the purpose of determining taxes and tax-exemptions on United States Savings bonds, the increment in value represented by the difference between the price paid and the price received (whether at or before maturity) is considered as interest.

Treasury Notes.-The notes may be issued in any one or more of the following series as the Secretary of the Treasury may prescribe in connection with the issue thereof:

(1) Exempt, both as to principal and interest, from all taxation (except estate, inheritance, or gift taxes) now or hereafter imposed by the United