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

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 Republic of Argentina for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital (the Convention), together with a related Protocol, signed at Buenos Aires on May 7, 1981. I also transmit the report of the Department of State on the Convention.

The Convention, based on the United States and OECD model income tax conventions published in 1977, is the first of its kind to be entered into by the United States with a Latin American country.

Argentina taxes all income derived in Argentina, but does not tax any income derived by residents of Argentina from foreign sources. Thus, the usual treaty practice of reciprocal reductions in withholding taxes at source on dividends, interest, and royalties paid to residents of the other country has little appeal to Argentina. Argentina is reluctant to reduce its own tax at source, incurring a revenue cost for which it sees no offsetting benefit. The negotiators believe that the Convention represents a fair and reasonable compromise between the Argentine position that tax should be imposed only at source and the broader view of the United States and most other countries that tax may also be imposed on the basis of residence.

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

RONALD REAGAN

The White House,

June. 11, 1981.