조세조약(미국-한국)

국세법령정보시스템(1979.10.20)

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1976. 6. 4 서울에서 서명 1979. 10. 20 발효 대한민국 정부와 미합중국 정부는, 소득에 대한 이중과세의 회피와 탈세방지 및 국제무역과 투자의 증진을 위한 협약의 체결을 희망하고, 그러한 목적으로 각자의 전권대표를 아래와 같이 임명하였으며, 대한민국 정부 : 대한민국 외무부장관 박동진 각하 미합중국 정부 : 대한민국주재 미합중국 특명전권대사 리챠드 엘. 스나이더 각하 상기인들은 그들의 전권위임장을 상호 교환한후 양호 타당함을 확인하여, 다음의 제 조항에 합의하였다.

제1조【대상조세】[1979.10.20]
(1) 이 협약의 대상이 되는 조세는 다음과 같다.

(a) 한국의 경우에는 소득세 및 법인세(한국의 조세)

(b) 미국의 경우에는 내국세법에 의하여 부과되는 연방소득세(미국의 조세)

(2) 이 협약은 상기 (1)항에 의하여 포함되는 조세와 실질적으로 유사한 조세로서 이 협약의 서명일자 이후에 현행 조세에 추가하여 부과되거나 또는 현행 조세에 대체하여 부과되는 조세에 대하여도 적용된다.

(3) 제7조 (무차별)의 목적상 이 협약은 중앙정부, 주정부 또는 지방정부의 수준에서 부과되는 모든 종류의 조세에 대하여도 적용된다. 제28조(정보의 교환)의 목적상 이 협약은 중앙정부의 수준에서 부과되는 모든 종류의 조세에 대하여도 적용된다.

제2조【일반적 정의】[1979.10.20]
(1) 달리 문맥에 따르지 아니하는 한, 이 협약에 있어서 아래의 용어들은 각기 다음의 의미를 가진다.

(a)

(i) "한국"이라 함은 대한민국을 의미한다.

(ii) "한국"이라 함은, 지리적 의미로 사용되는 경우에, 한국의 조세에 관한 법이 효력을 가지는 모든 영역을 의미한다. 한국이라 함은 또한 다음의 것을 포함한다.

(A) 한국의 영해

(B) 해저지역의 자연자원의 탐사 및 채취를 목적으로 국제법에 따라 한국이 주권적 권리를 행사하는 영해 밖의 한국의 연안에 인접한 해저지역의 해상과 하층토, 다만, 이 협약이 적용되는 인, 재산 또는 활동이 그러한 탐사 또는 채취와 관련되는 범위에 한한다.

(b)

(i) "미국"이라 함은 미합중국을 의미한다.

(ii) "미국" 이라 함은 지리적 의미로 사용되는 경우에, 미국의 제 주와 콜럼비아 특별구를 의미한다. 미국이라 함은 또한 다음의 것을 포함한다.

(A) 미국의 영해

(B) 해저지역의 자연자원의 탐사 및 채취를 목적으로 국제법에 따라 미국이 주권적 권리를 행사하는 영해 밖의 미국의 연안에 인접한 해저지역의 해상과 하층토, 다만, 이 협약이 적용되는 인, 재산 또는 활동이 그러한 탐사 또는 채취와 관련되는 범위에 한한다.

(d) "인"이라 함은 개인, 조합, 법인, 유산재단, 신탁재단 또는 기타 인의 단체를 포함한다.

(e)

(i) "한국법인" 또는 "한국의 법인" 이라 함은 한국 내에 본점 또는 주 사무소를 두고 있는 법인(미국법인 제외), 또는 한국의 조세 목적상 한국 법인으로 취급되는 단체를 의미한다.

(ii) "미국법인" 또는 "미국의 법인" 이라 함은 미국 또는 미국의 제 주 또는 콜럼비아특별구의 법에 따라 설립되거나 또는 조직되는 법인, 또는 미국의 조세목적상 미국법인으로 취급되는 법인격없는 단체를 의미한다.

(f) "권한있는 당국" 이라 함은 다음의 것을 의미한다.

(i) 한국의 경우에는 재무부장관 또는 그의 대리인

(ii) 미국의 경우에는 재무부장관 또는 그의 대리인 (g) "국가"라 함은, 어느 하나의 체약국을 말하는가의 여부에 관계없이 중앙정부가 대표하는 국가를 의미한다.

(h) "시민"이라 함은, 다음의 것을 의미한다.

(i) 한국의 경우에는 한국의 국민

(ii) 미국의 경우에는 미국의 시민

(2) 이 협약에서 사용되나 이 협약에서 정의되지 아니한 기타의 용어는, 달리 문맥에 따르지 아니하는 한, 그 조세가 결정되는 체약국의 법에 따라 내포하는 의미를 가진다. 상기 규정에 불구하고 일방 체약국의 법에 따른 그러한 용어의 의미가 타방 체약국의 법에 따른 용어의 의미와 상이하거나, 또는 그러한 용어의 의미가 어느 한 체약국의 법에 따라 용이하게 결정될 수 없는 경우에 양 체약국의 권한있는 당국은 이중과세를 방지하거나 또는 이 협약의 기타의 목적을 촉진하기 위하여 이 협약의 목적상 동 용어의 공통적 의미를 확정할 수 있다.

제3조【과세상의 주소】[1979.10.20]
(1) 이 협약에 있어서 하기 용어는 각기 다음의 의미를 가진다.

(a) "한국의 거주자"라 함은 다음의 것을 의미한다.

(i) 한국법인

(ii) 한국의 조세 목적상 한국에 거주하는 기타의 인(법인 또는 한국의 법에 따라 법인으로 취급되는 단체를 제외함), 다만, 조합원 또는 수탁자로서 행동하는 인의 경우에, 그러한 인에 의하여 발생되는 소득은 거주자의 소득으로서 한국의 조세에 따라야 하는 범위에 한한다.

(b) "미국의 거주자"라 함은 다음의 것을 의미한다.

(i) 미국법인

(ii) 미국의 조세 목적상 미국에 거주하는 기타의 인(법인 또는 미국의 법에 따라 법인으로 취급되는 단체를 제외함), 다만, 조합원 또는 수탁자로서 행동하는 인의 경우에, 그러한 인에 의하여 발생되는 소득은 거주자의 소득으로서 미국의 조세에 따라야 하는 범위에 한한다.

(c) 지불을 행하는 조합의 거주지를 결정함에 있어서 조합은 조합의 설립 또는 조직에 적용된 국가의 법에 따라 그 국가의 거주자로 간주된다. (2) 상기 (1)항의 규정에 의한 사유로 인하여 어느 개인이 양 체약국의 거주자인 경우에는 다음과 같이 취된다.

(a) 동 개인은 그가 주거를 두고 있는 그 체약국의 거주자로 간주된다.

(b) 동 개인이 양 체약국 내에 주거를 두고 있거나 또는 어느 체약국에도 주거를 두고 있지 아니하는 경우에 그는 그의 인적 및 경제적 관계가 가장 밀접한 그 체약국(중대한 이해관계의 중심지)의 거주자로 간주된다.

(d) 동 개인의 양 체약국 내에 일상적 거소를 두고 있거나 또는 어느 체약국에도 거소를 두고 있지 아니하는 경우에, 그는 그가 시민으로 소속하고 있는 체약국의 거주자로 간주된다.

(e) 동 개인이 양 체약국의 시민으로 되어 있거나 또는 어느 체약국의 시민도 아닌 경우에, 체약국의 권한있는 당국은 상호 합의에 의하여 그 문제를 해결한다. 본 항의 목적상 주거는 어느 개인이 그 가족과 함께 거주하는 장소를 말한다.

(3) 상기 제(2)항의 규정에 의한 사유로 인하여 일방 체약국의 거주자로 간주되지 아니하는 개인은, 제4조(과세의 일반규칙)를 포함하여, 이 협약의 모든 목적상 상기 일방 체약국의 거주자로서만 간주된다.

제4조【과세의 일반규칙】[1979.10.20]
(1) 일방 체약국의 거주자는, 이 협약에서 정한 제한에 따를 것으로 하여, 타방체약국 내에 원천을 둔 소득에 대하여 또한 그러한 소득에 대해서만 동 타방 체약국에 의하여 과세될 수 있다. 동 목적상 제6조에 정한 제 규칙(소득의 원천)은 소득의 원천을 결정하기 위하여 적용된다.

(2) 이 협약의 제 규정은 다음의 것에 의하여 현재 또는 차후에 부여되는 비과세, 면제, 비용공제, 세액공제 또는 기타의 공제를 어떠한 방법으로도 제한하는 것으로 해석되어서는 아니된다. (a) 일방 체약국에 의하여 부과되는 조세를 결정함에 있어서 동 일방 체약국의 법, 또는 (b) 양 체약국간의 기타 합의

(3) 이 협약의 제 규정은, 개정된 1973년 3월 12일자의 한국외자도입법(법률 제2598호) 또는 한국 내에 투자를 장려하기 위한 유사한 법의 규정에 따라 미국의 거주자에게 부여되는 혜택을 거부할 수 있도록, 한국의 법에 영향을 주지 아니한다.

(4) 본조 하기 (5)항을 제외한 이 협약의 어떠한 규정에도 불구하고 어느 체약국은, 이 협약이 효력을 발생하지 아니하였던 것처럼, 동 체약국의 시민 또는 거주자에 대하여 과세할 수 있다.

(5) 상기 (4)항의 규정은 다음의 것에 대하여 영향을 주지 아니한다.

(a) 제5조 (이중과세의 회피), 제7조 (무차별), 제24조(사회보장 지급금) 및 제27조(상호합의 절차)에 따라 어느 체약국이 부여하는 혜택

(b) 제20조(교직자), 제21조(학생 및 훈련생) 및 제22조(정부기능)에 따라, 어느 체약국의 시민이 아니거나 또는 동 체약국에의 이주자의 신분을 가지고 있지 아니한 개인에 대하여 동 체약국이 부여하는 혜택

(6) 양 체약국의 권한있는 당국은 이 협약의 제규정의 시행에 필요한 규정을 제정할 수 있다.

(7) 미국의 조세 목적상 미국의 거주자가 아닌 한국의 거주자(한국 정부 또는 그 지방공공단체의 공무원 또는 고용원 제외)의 경우에 미국의 내국세법이 하나의 인적 공제만을 규정하는 한, 이 협약의 서명일자에 유효한 내국세법 제151조 내지 154조에 규정된 조건에 따를 것으로 하여, 미국에 체재하며 과세연도중 납세자와 언제나 미국에 동거하는 동 납세자의 배우자 및 그 자녀에 대하여 인적 공제가 허용된다. 다만 그러한 추가공제는, 동 납세의무자 과세연도중에 내국세법 제864조 (c)항의 의미 내에서, 미국내의 상업 또는 사업의 수행에 실질적으로 관련된 것으로 취급되는 소득으로서 미국내에 원천을 둔 동 납세의무자의 총 소득이, 그 과세연도 중 동 납세의무자의 모든 원천으로부터 생기는 전체 소득에 차지하는 비율을 초과할 수 없다.

(8) 미국은 이 협약의 어떠한 규정에도 불구하고 개인지주회사세와 유보소득세를 부과할 수 있다. 다만, 주식의 전부가 전과세연도 중 한국의 거주자인 (미국의 시민이 아닌자)1인 이상의 개인에 의하여 직접적으로 또는 간접적으로 소유되고 있는 경우에 한국법인은 당해 과세연도 중 미국의 개인지주회사세로부터 면제된다. 한국 법인은 특정의 과세연도중 어느 시기에 고정사업장을 통하여 미국내에서 상업 또는 사업을 영위하지 아니하는 한, 당해 과세연도 중 미국의 유보소득세로부터 면제된다.

제5조【이중과세의 회피】[1979.10.20]
소득에 대한 이중과세는 다음과 같은 방법으로 회피된다.

(1) 한국법(법은 그 원칙을 변경하지 아니하고 수시로 개정될 수 있음)의 규정에 의거하고 또한 한국법의 제한에 따를 것을 조건으로 하여, 한국은 한국의 국민 또는 거주자에 대하여 미국에 납부한 적절한 소득액을 한국의 조세로부터 공제하며 또한 미국법인의 의결권의 최소한 10퍼센트를 소유하고 있는 한국법인이 특정의 과세연도 중 동 미국법인으로부터 배당을 받을 경우에, 동 배당지급의 원인이 되는 이유에 관해서는 동 배당을 지급하는 미국법인이 미국에 납부한 적절한 세액을 공제하는 것을 허용한다. 그러나 적절한 세액은 미국에 납부한 세액에 기초를 두어야 하나 동 국민 또는 거주자의 미국 내에 원천을 둔 순소득이 동일한 과세연도 중 그의 전체 순소득에 차지하는 비율에 해당하는 한국의 조세액의 부분을 초과하여서는 아니된다. 미국에 납부한 조세에 관해서 한국의 세액공제를 적용할 목적으로 제6조(소득의 원천)에 제규칙이 소득의 원천을 결정하기 위하여 적용된다.

(2) 미국법(법은 그 원칙을 변경하지 아니하고 수시로 개정될 수 있음)의 규정에 의거하고 또한 미국법의 제한에 따를 것을 조건으로 하여, 미국은 미국의 시민 또는 거주자에 대하여 미국의 조세로부터 적절한 한국의 세액을 공제하며, 또한 한국법인의 의결권의 최소한 10퍼센트를 소유하고 있는 미국법인이 특정의 과세연도 중 동 한국법인으로부터 배당을 받을 경우에, 동 배당지급의 원인이 되는 이윤에 관해서는 동 배당을 지급하는 한국법인이 한국에 납부할 적절한 세액을 공제하는 것을 허용한다. 그러한 적절한 세액은 한국에 납부한 세액에 기초를 두어야 하나, 그 세액공제는 동과세연도 중 미국의 법에 규정된 한도액 (한국내에 원천을 둔 소득 또는 미국외에 원천을 둔 소득에 대한 미국의 조세에 대한 세액공제를 제한하는 것을 목적으로 함)을 초과하여서는 아니된다. 한국에 납부한 조세에 관해서 미국의 세액공제를 적용할 목적으로 제6조(소득의 원천)에 규정된 제 규칙이 소득의 원천을 결정하기 위하여 적용된다.

제6조【소득의 원천】[1979.10.20]
이 협약의 목적상 소득의 원천은 다음과 같이 취급된다.

(1) 배당은 어느 체약국의 법인에 의하여 지급되는 경우에만 그 체약국 내에 원천을 둔 소득으로 취급된다.

(2) 이자는, 어느 체약국.그 정치적 하부조직 또는 지방공공단체 또는 동 체약의 거주자에 의하여 지급되는 경우에만, 동 체약국내에 원천을 둔 소득으로 취급된다. 전기 규정에도 불구하고 다음의 경우에 이자는 고정사업이 소재하고 있는 국가내에 원천을 둔것으로 간주된다.

(a) 동 이자를 지급하는 인(그가 어느 체약국의 거주자인가의 여부에 관계없음)이 그 이자 지급의 원인이 되는 채무의 발생에 관련된 고정사업장을 일방 체약국내에 두며 또한 동 이자가 동 고정사업장에 의하여 부담되는 경우, 또는 (b) 동 이자를 지급하는 인이 일방 체약국의 거주자이며, 어느 체약국 이외의 기타 국가내에 고정사업장을 두면서 그 이자 지급의 원인이 되는 채무가 동 고정사업장에 관련하여 발생되며, 그 이자가 타방 체약국의 거주자에게 지급되며 또한 그 이자가 동 고정사업장에 의하여 부담되는 경우

(3) 제14조(사용료) (4)항에 규정된 재산(선박 또는 항공기에 관해서 본조(5)항에 규정된 것 이외의 재산)의 사용 또는 사용할 권리에 대하여 동 조항에 규정된 사용료는 어느 체약국내의 동 재산의 사용 또는 사용할 권리에 대하여 지급되는 경우에만 동 체약국 내에 원천을 둔 소득으로 취급된다.

(4) 부동산 및 광산, 채석장 또는 기타 자연자원의 운용으로부터 발생하는 사용료(그러한 재산의 매각 또는 그러한 사용료를 발생시키는 권리로부터 얻는 이득을 포함함)에 의한 소득은 그러한 재산이 어느 체약국 내에 소재하는 경우에만 동 체약국 내에 원천을 둔 소득으로 취급된다.

(5) 유형재산(동산)의 임대소득은 그러한 재산이 어느 체약국 내에 소재하는 경우에만 동 체약국 내에 원천을 둔 소득으로 취급된다. 국제운수상의 선박 또는 항공기의 운행에 종사하지 아니하는 인이 취득하는 선박 또는 항공기의 임대소득은 그 임차인이 어느 체약국의 거주자인 경우에만 그 체약국 내에 원천을 둔 소득으로 취급된다.

(6) 피고용인으로서 또는 독립적 자격으로서 노무 또는 개인적 용역의 수행에 대하여 또는 타인의 개인적 용역을 제공한 것에 대하여 개인이 받는 소득과 법인의 피고용인 또는 기타의 자의 개인적 용역을 제공한 것에 대하여 법인이 받는 소득은 그러한 용역이 어느 체약국 내에서 수행되는 범위에 한하여 동 체약국 내에 원천을 둔 소득으로 취급된다. 어느 체약국의 거주자에 의하여 국제운수에 운행되는 선박 또는 항공기에 탑승하여 수행하는 개인적 용역으로부터 받는 소득은 그 용역이 동 선박 또는 항공기의 정규 승무원조의 일원으로 제공되는 경우에 동 체약국내에 원천을 둔 소득으로 취급된다. 본 항의 목적상 노무 또는 개인적 용역으로부터 받는 소득은 그러한 용역에 대하여 지급되는 연금(제23조(민간 퇴직임금 및 보험임금) (3)항에 규정된 것)을 포함한다. 본 항의 전기 제 규정에도 불구하고 제22조(정부기능)에 규정된 보수 및 제24조(사회보장 지급금)에 규정된 지급금은 어느 체약국 또는 그 지방공공단체의 공적 자금에 의하여 지급되는 경우에만 동 체약국내에 원천을 둔 소득으로 취급된다.

(7) 무형 또는 유형의 개인재산(동산을 포함함)의 매매로부터 얻는 소득(제14조 (사용료)(4)(b)항에 의한 사용료로 규정된 이득은 제외됨)은 그러한 재산이 어느 체약국 내에서 매각되는 경우에만 동 체약국내에 원천을 둔 소득으로 취급된다.

(8) 상기(1)항 내지 (7)항에도 불구하고, 일방 체약국의 거주자인 수령자가 타방 체약국내에 두는 고정사업장에 귀속되는 산업상 또는 상업상의 이윤과 부동산 및 자연자원으로부터 발생하는 소득, 배당, 이자, 사용료(제14조(사용료)항에 (4)항에 정의된 것) 및 양도소득은, 그러한 소득, 배당, 이자, 사용료 또는 양도소득을 발생시키는 권리 또는 재산이 동 고정사업장에 실질적으로 관련되는 경우에만, 동 타방 체약국내에 원천을 둔 소득으로 취급된다.

(9) 본조 (1)항 내지 (8)항이 적용되지 아니하는 항목의 소득원천은 각 체약국의 법에 따라 그 체약국에 의하여 결정된다. 전기 규정에 불구하고 일방 체약국의 법에 의한 어떤 항목의 소득원천이, 타방 체약국의 법에 의한 그러한 소득원천과 상이하거나 또는 그러한 소득원천이 어느 체약국의 법에 의하여 용이하게 결정될 수 없을 경우에, 양 체약국의 권한있는 당국은 이중과세를 회피하기 위하여 또는 이 협약의 기타 목적을 촉진하기 위하여 이 협약의 목적을 위한 항목의 소득에 대한 공동의 원천을 확정할 수 있다.

제7조【무차별】[1979.10.20]
(1) 타방 체약국의 거주자인 일방 체약국의 시민은 동 타방 체약국내에서 동 타방 체약국의 거주자인 동 타방 체약국의 시민이 부담하는 것보다 더 많은 조세를 부담하지 아니한다.

(2) 일방 체약국의 거주자가 타방 체약국내에 두고 있는 고정사업장은 동 타방 체약국 내에서 동일한 활동에 종사하는 동 타방 체약국의 거주자가 부담하는 것보다 더 많은 조세를 부담하지 아니한다. 본 항은 어느 체약국이 그 개인 거주자에게 시민으로서의 지위 또는 가족부양 책임으로 인하여 부여하는 조세 목적상의 인적공제면제 또는 비용공제를 동 체약국이 타방 체약국의 개인 거주자에게 부여해야 하는 의무를 부과하는 것으로 해석되어서는 아니된다.

(3) 그 자본의 전부 또는 일부가 타방 체약국의 1인 이상의 거주자에 의하여 직접적으로 또는 간접적으로 소유되거나 또는 지배되고 있는 어느 체약국의 법인은, 동일한 활동에 종사하는 동 체약국의 법인으로서 그 자본의 전부가 동 체약국의 1인 이상의 거주자에 의하여 소유되거나 또는 지배되고 있는 동 법인이 부담하거나 또는 부담할 수 있는 조세와 이에 관련되는 요건이 이 외의 다른 또는 더 많은 조세 또는 이에 관련되는 요건을 동 체약국에서 부담하지 아니한다.

제8조【사업소득】[1979.10.20]
(1) 일방 체약국의 거주자의 산업상 또는 상업상의 이윤은, 그 거주자가 타방체약국에 소재하는 고정사업장을 통하여 동 타방 체약국내에서 산업상 또는 상업상의 활동에 종사하지 아니하는 한, 동 타방 체약국에 의한 조세로부터 면제된다. 동 거주자가 산업상 또는 상업상의 이윤에 대하여 동 타방 체약국이 과세할 수 있으나, 고정사업장에 귀속되는 동 이윤에 대해서만 과세된다.

(2) 일방 체약국의 거주자가 타방 체약국에 소재하는 고정사업장을 통하여 타방 체약국내에서 산업상 또는 상업상의 활동에 종사하는 경우에는, 동 고정사업장이 동일한 또는 유사한 조건하에서, 동일한 또는 유사한 활동에 종사하고, 또한 어느 고정사업장을 가진 거주자와 전적으로 독립해서 거래하는 독립적 사업체로 가정하는 경우에 동 고정사업장에 귀속되는 산업상 또는 상업상의 이윤은 각 체약국내에서 동 고정사업장에 귀속된다.

(3) 고정사업장의 산업상 또는 상업상의 이윤을 결정함에 있어서 경영비와 일반 관리비를 포함하여 합리적으로 그 이윤에 관련되는 경비는 고정사업장에 소재하는 체약국내에서 또는 다른 곳에서 발생하는가에 관계없이 비용공제가 허용된다.

(4) 일방 체약국의 거주자의 계산으로, 동 거주자가 타방 체약국내에 둔 고정사업장에 의하거나 또는 동 고정사업장을 가진 그 거주자에 의하여 재화 또는 상품이 구입되는 이유만으로, 이윤은 동 거주자의 고정사업장에 귀속되지 아니한다.

(5) "산업상 또는 상업상의 활동"이라 함은 상업 또는 사업의 능동적 수행을 의미한다. 동 활동에는 제조업, 상업, 보험업, 은행업, 금융업, 농업, 수산업 또는 광업활동의 수행과 선박 또는 항공기의 운행, 용역의 제공 및 유형의 개인재산(선박 또는 항공기를 포함함)의 임대가 포함된다. 피고용인으로서 또는 독립적 자격으로 개인이 인적 용역을 수행하는 것은 동 용역에 포함되지 아니한다.

(6)

(a) "산업상 또는 상업상의 이윤"이라 함은 산업상 또는 상업상의 활동으로 얻는 부동산 및 자연 자원으로부터 얻는 소득, 배당, 이자, 사용료(제14조(사용료)(4)항에 규정된 것) 및 양도소득을 의미한다. 다만, 동 소득이 산업상 또는 상업상의 활동으로부터 얻어진 것인가에 관계없이 그러한 소득, 배당, 이자, 사용료 또는 양도소득을 발생시키는 재산 또는 권리가 일방 체약국의 거주자인 수령자가 타방 체약국내에 두고 있는 고정사업장과 실질적으로 관련된 경우에만 그러하다.

(b) 재산 또는 권리가 고정사업장과 실질적으로 관련되어 있는가를 결정하기 위하여 고려되어야 할 요소는, 동 권리 또는 재산이 고정사업장을 통하여 산업상 또는 상업상의 활동 수행에 사용되고 있는가, 또는 사용을 위하여 보유되고 있는가, 그리고 동 고정사업장을 통하여 수행된 활동이 동 재산 또는 권리로부터 또는 소득의 취득에 있어서 실질적 요소이었던 것인가를 포함한다. 이러한 목적상 동 재산 또는 권리 또는 동 소득이 동 고정사업장을 통하여 계상되었는지의 여부를 정당히 고려하여야 한다.

(7) 산업상 또는 상업상의 이윤은 이 협약의 다른 제 조항에서 별도로 취급되는 소득의 항목을 포함하는 경우에, 동 조항에서 달리 규정되는 것을 제외하고, 동 조항의 제 규정은 본 조의 규정을 대체한다.

제9조【고정사업장】[1979.10.20]
(1) 이 협약의 목적상 "고정사업장"이라 함은 어느 체약국의 거주자가 산업상 또는 상업상의 활동에 종사하는 사업상의 고정된 장소를 의미한다.

(2) "사업상의 고정된 장소"라 함은 다음의 것을 포함하나 그에 한정되지 아니한다.

(a) 지 점

(b) 사무소

(d) 작업장

(e) 창 고

(f) 상점 또는 기타 판매소

(g) 광산.채석장 또는 기타 자연자원의 채취장

(h) 6개월을 초과하여 존속하는 건축공사 또는 건설 또는 설비공사

(3) 상기 (1)항 및 (2)항에 불구하고 고정사업장에는 다음의 어느 하나 또는 그 이상의 목적만을 위하여 사용되는 사업상의 고정된 장소가 포함되지 아니한다.

(a) 거주자에 속하는 재화 또는 상품의 보관, 전시 또는 인도를 위한 시설의 사용

(b) 저장, 전시 또는 인도 목적상 거주자에 속하는 재화 또는 상품의 재고 보유

(d) 거주자를 위한 물품 또는 상품의 구입목적상 또는 정보수집을 위한 상업상의 고정된 장소의 보유

(e) 거주자를 위한 광고, 정보의 제공, 과학적 조사 또는 예비적 또는 보조적 성격을 가지는 유사한 활동을 위한 사업상의 고정된 장소의 보유 또는

(f) 6개월을 초과하여 존속하지 아니하는 건축공사 또는 건설 또는 설비공사의 보유

(4) 일방 체약국의 거주자가 본조 (1)항 내지 (3)항에 따라 타방 체약국내에 고정사업장을 가지고 있지 아니한 경우에도, 다음과 같은 대리인을 통하여 동 타방 체약국내에서 상업 또는 사업에 종사하는 경우에, 동 거주자는 동 타방 체약국에 고정사업장을 가진 것으로 간주된다.

(a) 동 거주자 명의의 계약 체결권을 가지며 또한 동 타방 체약국내에서 동 권한을 정규적으로 행사하는 대리인. 다만 동 권한의 행사가 동 거주자의 계산으로 재화 또는 상품을 구입함에 한정되지 아니하는 경우이어야 한다. 또는

(b) 동 대리인이 정규적으로 주문에 응하거나 또는 인도를 행하는 그 거주자에 속하는 재화 또는 상품의 재고를 동 타방 체약국내에 보유하는 대리인

(5) 상기(3)항의 세항(a), (c) 및 (d)에도 불구하고 일방 체약국의 거주자가 타방 체약국내에 사업상의 고정된 장소를 가지며, 또한 재화 또는 상품이 (a)동 타방 체약국 내에서 타인에 의하여 가공되어야 하거나 (동 타방 체약국내에서 구입된 것인가의 여부에 관계없음), 또는 (b)동 타방 체약국 내에서 구입되는 경우(동 재화 또는 상품이 타방 체약국 외에서 가공되어야 하는 것은 아님)에, 동 재화 또는 상품의 전부 또는 일부가 동 타방 체약국내에서의 사용, 소비, 처분을 위하여 동 거주자에 의하여 또는 동 거주자를 위하여 매각되면, 동 거주자는 동 타방 체약국내에 고정사업장을 가진 것으로 간주된다.

(6) 상기(4)항 및 (5)항의 제 규정에도 불구하고 일방 체약국의 거주자가 타방 체약국내에서 중개인, 일반 위탁매매인 또는 기타의 독립적 지위를 가진 대리인으로서 정상적인 방법으로 사업을 행하고 있는 동 중계인 또는 대리인을 통하여 산업상 또는 상업상의 활동에 종사하고 있는 이유만으로 동 거주자는 동 타방 체약국내에 고정사업장을 가진 것으로 간주되지 아니한다.

(7) 일방 체약국의 거주자가, 타방 체약국의 거주자 또는 동 타방 체약국내에서 산업상 또는 상업상의 활동에 종사하는 인(고정사업장을 통하거나 또는 다른 방법에 의함)과의 특수관계인(제11조 특수관계인에 규정된 자)이라는 사실은, 동 일방체약국의 거주자가 동 타방 체약국내에 고정사업장을 가지고 있는가를 결정함에 있어서 고려되어서는 아니된다. (8) 상기(1)항 내지 (7)항에 규정된 제 원칙은, 이 협약의 목적상 어느 체약국 이외의 다른 국가내에 고정사업장이 있는가 또는 어느 체약국의 거주자 이외의 타인이 어느 체약국내에 고정사업장을 가지고 있는가를 결정함에 있어서 적용된다.

제10조【해운 및 항공운수】[1979.10.20]
제8조(사업소득)에 불구하고 일방 체약국의 거주자가 국제운수상 선박 또는 항공기의 운행으로부터 얻는 소득은 타방 체약국에 의한 조세로부터 면제된다. 본조의 목적상 선박 또는 항공기의 국제운수상의 운행으로부터 발생되는 소득에는 콘테이너 및 콘테이너의 내륙운송을 위한 트레일러와 기타 관련되는 장비의 사용 또는 임대로부터 발생되는 소득과 같이 동 운행에 부수되는 장비의 사용 또는 임대로부터 발생되는 소득과 같이 동운행에 부수되는 소득이 포함되나, 콘테이너 내륙운송으로부터 발생되는 기타의 소득은 포함되지 아니한다.

제11조【특수관계인】[1979.10.20]
(1) 어느 체약국의 조세관할권에 따라야 하는 인과 기타의 인이 특수관계에 있으며, 또한 그러한 특수관계인 간에 독립인 간에 행하여지는 것과는 상이한 약정을 그들간에 체결하거나, 또는 조건을 부과하는 경우에, 동 약정 또는 조건이 없었더라면 상기 어느인의 소득(또는 손실) 또는 그 인의 납부세액 계산에 고려되었을 것이나 그 약정 또는 조건 때문에 계상되지 아니한 소득, 비용공제, 세액공제 또는 소득공제는, 과세의 대상이 되는 소득액 또는 특수관계인이 납부해야 할 세액을 계산함에 있어서 고려될 수 있다. (2) 이 협약의 목적상 어느 인이 직접적으로 또는 간접적으로 타인을 소유하거나 또는 지배하는 경우 또는 어느 제3자가 직접적으로 또는 간접적으로 상기 양자를 소유하거나 또는 지배하는 경우에, 그 인은 동 타인과 특수관계를 가진 것으로 본다. 이 협약의 목적상 "지배"라 함은, 법적으로 실시할 수 있는지의 여부에 관계없이, 또한 여하히 행사되는가 또는 행사할 수 있는가를 불문하고, 모든 종류의 지배를 포함한다.

제12조【배당】[1979.10.20]
(1) 타방 체약국의 거주자가 일방 체약국내의 원천으로부터 받는 배당은 양 체약국에 의하여 과세될 수 있다.

(2) 타방 체약국의 거주자가 일방 체약국내의 원천으로부터 받는 배당에 대하여 동 일방 체약국이 부과하는 세율은 아래의 것을 초과해서는 아니된다.
(a) 총배당액의 15퍼센트, 또는
(b) 배당 수취인이 법인인 경우에는 다음의 사정하에서 총배당액의 10퍼센트
(i) 배당지급 일자에 선행하는 지급법인의 과세연도의 일부기간중 및 그 직전 과세연도의 전체 기간중에 지급법인의 발행된 의결권 주식중 적어도 10퍼센트를 배당수취 법인이 소유하며, 또한
(ii) 상기 직전 과세연도중에 지급법인의 총소득의 25퍼센트 이하가 이자 또는 배당으로 구성되는 경우(은행, 보험 또는 금융업으로 발생한 이자와 동 배당 또는 이자의 수취시에 발행된 의결권 주식중 50퍼센트 이상을 지급법인이 소유하고 있는 자회사로부터 받는 배당과 이자는 제외됨).

(3) 일방 체약국의 거주자인 배당수취인이 타방 체약국내에 고정사업장을 가지며 또한 배당을 지급받는 주식이 동 고정사업장과 실질적으로 관련을 가지는 경우에는, 상기(2)항이 적용되지 아니한다. 그러한 경우에는 제8조(사업소득) (6)(a)항의 규정이 적용된다.

제13조【이자】[1979.10.20]
(1) 타방 체약국의 거주자에 의하여 일방 체약국의 원천으로부터 발생한 이자는 양 체약국에 의하여 과세 될 수 있다.

(2) 타방 체약국의 거주자에 의하여 일방 체약국내의 원천으로부터 발생한 이자에 대하여 일방 체약국이 부과하는 세율은 그 이자 총액의 12퍼센트를 초과해서는 아니된다.

(3) 상기 (1)항 및 (2)항에 불구하고 일방 체약국내의 원천으로부터 발생한 이자는 그 소득이 타방 체약국의 과세대상이 되지 아니할 것으로 하여, 타방 체약국 정부 그 지방공공단체 또는 그 중앙은행에 의하여 그 수익으로 발생되거나 또는 동 정부 또는 동 중앙은행 또는 정부와 중앙은행의 양자가 전적으로 소유하고 있는 기관에 의하여 그 수익으로 발생되는 경우에는, 동 일방 체약국에 의한 과세로부터 면제된다.

(4) 일방 체약국의 거주자인 이자의 수취인이 타방 체약국내에 고정사업장을 가지며 또한 동 이자를 발생시키는 채무가 동 고정사업장과 실질적으로 관련되어 있는 경우에 상기(2)항은 적용되지 아니한다. 그러한 경우에는 제8조(사업소득) (6)(a)항이 적용된다.

(5) 어느 특수관계인에게 이자로서 지급된 표시 금액이 비특수관계인에게 지급되었을 금액을 초과하는 경우에, 본조의 규정은 비특수관계인에게 지급되었을 이자에 대해서만 적용된다. 그러한 경우에 초과 지급액은, 적용할 수 있다면, 이 협약의 제규정을 포함하여 각 체약국의 법에 따라 각 체약국에 의하여 과세될 수 있다.

(6) 이 협약에서 사용되는 "이자"라 함은 공채, 사채, 국채, 어음 또는, 그 담보의 유무와 이익 참가권의 수반 여부에 관계없는, 기타의 채무증서와 모든 종류의 채권으로부터 발생하는 소득 및 그 소득의 원천이 있는 체약국의 세법에 따라 금전의 대부에서 발생한 소득으로 취급되는 기타의 소득을 의미한다.

제14조【사용료】[1979.10.20]
(1) 타방 체약국의 거주자에 의하여 일방 체약국내의 원천으로부터 발생되는 사용료에 대하여 동 일방 체약국이 부과하는 조세는, 하기(2)항 및 (3)항에 규정된 경우를 제외하고는, 그 사용료 총액의 15퍼센트를 초과해서는 아니된다.

(2) 저작권 또는 문학, 연극, 음악 또는 예술작품의 생산 또는 재생산권으로부터 일방 체약국의 거주자에 의하여 발생되는 사용료와, 라디오 또는 텔레비전방송용 필름과 테이프를 포함하여 영화필름의 사용 또는 사용권에 대한 대가로 받는 사용료는, 동 사용료 총액의 10퍼센트를 초과하는 세율로써 동 타방 체약국에 의하여 과세될 수 없다.

(3) 일방 체약국의 거주자인 사용료 수취인이 타방 체약국내에서 고정사업장을 가지며 또한 동 사용료를 발생시키는 권리 또는 재산이 동 고정사업장과 실질적으로 관련되어 있는 경우에는, 상기 (1)항 및 (2)항이 적용되지 아니한다. 그러한 경우에는, 제8조(사업소득) (6) (a)항이 적용된다.

(4) 본 조에서 사용되는 "사용료"라 함은 다음의 것을 의미한다.

(a) 문학.예술.과학작품의 저작권 또는 영화필름.라디오 또는 텔레비전 방송용 필름 또는 테이프의 저작권, 특허, 의장,신안,도면, 비밀공정 또는 비밀공식, 상표 또는 기타 이와 유사한 재산 또는 권리, 지식, 경험, 기능(기술), 선박 또는 항공기(임대인이 선박 또는 항공기의 국제운수상의 운행에 종사하지 아니하는 자인 경우에 한함)의 사용 또는 사용권에 대한 대가로서 받는 모든 종류의 지급금

(b) 그러한 재산 또는 권리(선박 또는 항공기는 제외됨)의 매각, 교환 또는 기타의 처분에서 발생한 소득중에서 동 매각, 교환 또는 기타의 유상처분으로 취득된 금액이 그러한 재산 또는 권리의 생산성, 사용 또는 처분에 상응하는 부분. 사용료에는 광산, 채석장 또는 기타 자연자원의 운용에 관련하여 지급되는 사용료, 임차료 또는 기타의 금액은 포함되지 아니한다.

(5) 특수관계인에게 사용료로서 지급된 금액이 비특수관계인에게 지급되는 금액을 초과하는 경우에, 본 조의 제 규정은 비특수관계인에게 지급되는 사용료의 상당액에 대해서만 적용된다. 그러한 경우에 초과 지급금은, 적용할 수 있는 경우에, 이 협약의 제 규정을 포함하여 각 체약국의 법에 따라 각 체약국에 의하여 과세될 수 있다.

제15조【부동산 소득】[1979.10.20]
(1) 사용료 및 자연자원의 채취에 관련된 기타의 지급금을 포함한 부동산 소득과 동 사용료 또는 기타의 지급금을 발생시키는 재산 또는 권리의 매각, 교환 또는 기타의 처분으로부터 발생하는 이득은 그러한 부동산 또는 자연자원이 소재하는 체약국에 의하여 과세될 수 있다. 이 협약의 목적상 부동산에 의하여 담보가 결정되었거나 또는 사용료 혹은 자연자원의 채취에 관련되는 기타의 지급금을 발생시키는 권리에 의하여 담보가 설정된, 채무에 대한 이자는 부동산 소득으로 간주되지 아니한다.

(2) 상기 (1)항은 부동산의 용익권, 직접사용, 임대 또는 기타 형태의 사용으로부터 발생한 소득에 적용된다.

제16조【양도소득】[1979.10.20]
(1) 일방 체약국의 거주자는 아래의 경우에 해당되지 아니하는 한, 자본적 자산의 매각, 교환 또는 기타의 처분으로부터 발생하는 소득에 대하여 타방 체약국에 의한 과세로부터 면제된다. (a) 타방 체약국에 소재하는 재산으로서 제15조(부동산 소득)에 규정된 재산의 매각, 교환 또는 기타의 처분으로부터 일방 체약국의 거주자에 의하여 동 소득이 발생되는 경우 (b) 일방 체약국의 거주자인 동 소득의 수취인이 타방 체약국내에 고정사업장을 가지며 또한 동 소득을 발생시키는 재산이 동 고정사업장과 실질적으로 관련되는 경우 (c) 일방 체약국의 거주자인 개인으로서 동 소득의 수취인이 (i) 과세연도중 총 183일 이상의 단일기간 또는 제기간 동안 타방 체약국내에 고정시설을 유지하며 또한 동 이득을 발생시키는 재산이 동 고정시설과 실질적으로 관련되어 있거나 또는 (ii) 동 수취인이 과세연도중 총 183일 이상의 단일기간 또는 제 기간 동안 타방 체약국에 체재하는 경우 (2) 상기 (1)(a)항에 규정된 소득의 경우에는 제15조(부동산 소득)의 규정이 적용된다. 상기(1)(b)항에 규정된 소득의 경우에는 제8조(사업소득)의 규정이 적용된다.

제17조【투자회사 또는 지주회사】[1979.10.20]
타방 체약국내의 원천으로부터 배당, 이자, 사용료 또는 양도소득을 발생시키는 일방 체약국의 법인은 다음의 경우에 제12조(배당), 제13조(이자), 제14조(사용료) 또는 제16조(양도소득)상의 혜택을 받을 권리를 가지지 아니한다. (a) 특별조치에 의한 이유로 동 배당, 이자, 사용료 또는 양도소득에 대하여 상기 일방 체약국이 동 법인에 부과하는 조세가, 동 일방 체약국이 법인소득에 대하여 일반적으로 부과하는 조세보다 실질적으로 적으며, 또한 (b) 동 법인 자본의 25퍼센트 이상이 상기 일방 체약국의 개인 거주자가 아닌 (또는 한국법인의 경우에는 미국시민)1인 이상의 인에 의하여 직접적으로 또는 간접적으로 소유되는 것으로 등록되어 있거나, 또는 양 체약국의 권한있는 당국간의 협의를 거쳐 달리 결정되는 경우

제18조【독립적 인적용역】[1979.10.20]
(1) 일방 체약국의 거주자인 개인이 독립된 자격으로 인적용역을 제공하여 취득하는 소득은 동 일방 체약국에 의하여 과세될 수 있다. 하기 (2)항에 규정된 경우를 제외하고 동 소득은 타방 체약국에 의한 과세로부터 면제된다.

(2) 일방 체약국의 거주자인 개인이 타방 체약국내에서 독립된 자격으로 인적용역을 제공하여 취득하는 소득은, 다음의 경우에, 동 타방 체약국에 의하여 과세될 수 있다.

(a) 동 개인이 과세연도중 총 183일 이상의 단일기간 또는 제 기간동안 동 타방체약국 내에 체재하는 경우

(b) 상기 소득이 과세연도중 미화 3,000불 또는 이에 상당하는 원화를 초과하는 경우, 또는

제19조【근로소득】[1979.10.20]
(1) 법인의 직원으로서 제공한 용역에 대한 보수를 포함하여, 피고용인으로서 제공한 노무 또는 인적용역으로부터 일방 체약국의 거주자인 개인에 의하여 발생되는 임금, 급여 및 이와 유사한 보수는 동 일방 체약국에 의하여 과세될 수 있다. 하기 (2)항에 규정된 경우를 제외하고 타방 체약국내의 원천으로부터 발생되는 보수는 동 타방 체약국에 의해서도 과세될 수 있다.

(2) 일방 체약국의 거주자인 개인에 의하여 발생되는 상기(1)항에 규정된 보수는 다음의 경우에 타방 체약국에 의해서도 과세로부터 면제된다.

(a) 동 개인이 과세연도중 총 183일 미만의 단일기간 또는 기간 동안 동 타방 체약국내에 체재하는 경우

(b) 동 개인이 동 일방 체약국의 거주자 또는 동 일방 체약국내에 보유하고 있는 고정사업장의 피고용인인 경우

(d) 동 소득이 미화 3,000불 또는 이에 상당하는 원화를 초과하지 아니하는 경우

(3) 상기 (2)항에 불구하고 일방 체약국의 거주자가 국제운수상 운행하는 선박 또는 항공기에 탑승하는 피고용인으로서 노무 또는 인적용역의 제공으로부터 동 개인이 취득하는 보수는, 동 개인이 동 선박 또는 항공기의 정규승무원조의 일원인 경우에, 동 타방 체약국에 의한 과세로부터 면제된다.

제20조【교직자】[1979.10.20]
(1) 일방 체약국의 거주자가, 타방 체약국이 정부, 그 정치적 하부조직 또는 지방공공단체 또는 동 타방 체약국내의 기타 인가된 교육기관에 의하여, 대학 또는 기타 인가된 교육기관에서의 강의 또는 연구의 목적으로 또는 강의와 연구의 양자를 위한 목적으로 2년을 초과하지 아니할 예정의 기간동안 동 타방 체약국으로 초청되고 또한 일차적으로 그러한 목적을 위하여 동 타방 체약국에 오는 경우 상기 대학 또는 교육기관에서의 강의 또는 연구에 대한 인적용역으로부터 받는 동 거주자의 소득은, 동 거주자가 타방체약국에 도착한 일자로부터 2년을 초과하지 아니하는 기간 동안 동 타방 체약국에 의한 과세로부터 면제된다.

(2) 상기 연구가, 공공의 이익을 위하지 아니하고 일차적으로 특정인 또는 특정인들을 위하여 수행되는 경우에, 동 연구로부터 받는 소득에는 본조가 적용되지 아니한다.

제21조【학생 및 훈련생】[1979.10.20]
(1) (a)타방 체약국에 일시적으로 체재하게 되는 당시에 일방체약국의 거주자인 개인으로서 하기에 일차적 목적을 위하여 동 타방 체약국에 일시적으로 체재하는 자는, 동 개인이 동 타방 체약국에 도착한 일자로부터 5개의 과세연도를 초과하지 아니하는 기간 동안, 하기 세항(b)에 규정된 금액에 대하여 동 타방 체약국에 의한 과세로부터 면제된다.

(i) 동 타방 체약국내의 대학 또는 기타 인가된 교육기관에서의 수학

(ii) 전문직업 또는 전문적 특기의 실무에 종사하기 위한 자격에 필요한 연수, 또는

(iii) 정부, 종교, 자선, 과학, 문학 또는 교육기관으로부터 받는 교부금 수당 또는 장려금의 수취인으로서의 수학 또는 연구 (b) 상기 세항(a)에 언급된 자금은 다음의 것을 말한다.

(i) 동 개인의 생계, 교육, 수학, 연구 또는 훈련 목적을 위한 해외로부터의 송금

(ii) 교부금, 수당 또는 장려금

(iii) 동 타방 체약국에서 수행한 인적용역으로부터 받는 소득으로서 과세연도중 미화 2,000불 또는 이에 상당하는 원화를 초과하지 아니하는 금액

(2) 타방 체약국에 일시적으로 체재하게 되는 당시에 일방 체약국의 거주자인 개인으로서, 하기의 일차적 목적을 위하여 동 일방 체약국의 거주자의 피고용인으로서 또는 동 거주자와의 계약에 따라 동 타방 체약국에 일시적으로 체재하는 자는 미화 5,000불 또는 이에 상당하는 원화를 초과하지 아니하는 총액으로서 인적용역으로부터 받는 소득에 대하여 1년을 초과하지 아니하는 기간동안, 동 타방 체약국에 의한 과세로부터 면제된다.

(a) 동 일방 체약국의 동 거주자 이외의 인 또는 동 거주자와 관련이 있는 인 이외의 인으로부터의 기술상, 전문직업상 또는 사업상의 경험 습득, 또는

(b) 동 타방 체약국내의 대학 또는 기타 인가된 교육기관에서의 수학

(3) 타방 체약국에 일시적으로 체재하게 되는 당시에 일방 체약국의 거주자인 개인이 훈련, 연구 또는 수학의 일차적 목적을 위하여 동 타방 체약국의 정부가 후원하는 사업계획에의 참가자로서 1년을 초과하지 아니하는 기간동안 동 타방 체약국에 일시적으로 체재하는 자는, 미화 10,000불 또는 이에 상당하는 원화를 초과하지 아니하는 총액으로서 동 타방 체약국에서 수행한 훈련, 또는 수학에 관련된 인적용역으로부터 받는 소득에 대하여, 동 타방 체약국에 의한 과세로부터 면제된다.

(4) 제20조(교직자)와 본 조(1)항에 규정된 혜택은, 통산할 경우에 동 혜택을 주장하는 개인의 도착일자로부터 5개의 과세연도를 초과하지 아니하는 기간으로서, 합리적으로 또는 관례적으로 동 체재 목적의 달성에 필요한 기간에 대해서만 그 적용이 연장된다.

제22조【정부기능】[1979.10.20]
일방 체약국 또는 그 정부기능을 수행하는 기관의 피고용인으로서 제공한 노무 또는 인적용역에 대하여, 동 일방 체약국의 공공자금으로부터 동 일방 체약국의 시민에게, 퇴직연금.보험연금 또는 유사한 이익을 포함하여 지급되는 임금, 급료 및 유사한 보수는, 동 타방 체약국에 의한 과세로부터 면제된다.

제23조【민간 퇴직연금 및 보험연금】[1979.10.20]
(1) 제22조 (정부기능)에 규정된 경우를 제외하고 과거의 고용에 대한 대가로서 일방 체약국의 거주자인 개인에게 지급되는 퇴직연금 및 기타의 유사한 보수는 동 일방 체약국에서만 과세된다.

(2) 일방 체약국의 거주자인 개인에게 지급되는 별거수당과 보험연금은 동 일방 체약국에서만 과세된다.

(3) 본 조에서 사용되는 "퇴직연금 및 기타의 유사한 보수"라 함은,

(a) 제공된 용역에 대한 대가로서 퇴직 또는 사망의 이유에 의하거나,

(b) 또는 과거의 고용에 관련하여 받는 상해보상의 방법으로 지급되는 정기 지급금을 의미한다.

(4) 본 조에서 사용되는 "보험연금"이라 함은 적당하고 충분한 대가의 대상으로 (제공된 용역에 대한 것을 제외함) 지급의무에 따라 생존기간 또는 특정 연한 동안 소정의 시기에 정기적으로 지급되는 소정의 금액을 의미한다.

(5) 본 조에서 사용되는 "별거수당"이라 함은 이혼명령, 별거수당 합의서, 부양 또는 별거합의서에 따른 정기적 지급금으로서 수취인이 거주자로 되어 있는 체약국의 국내법에 따라 동 수취인에게 과세될 수 있는 것을 의미한다.

제24조【사회보장 지급금】[1979.10.20]
일방 체약국에 의하여 타방 체약국의 거주자인 개인에게(한국이 그러한 지급을 하는 경우에는 미국의 시민인 개인) 지급되는 사회보장 지급금과 기타의 공직 연금은 동 일방 체약국내에서만 과세된다. 본 조는 제22조(정부기능)에 규정된 지급금에 적용되지 아니한다.

제25조【사회보장세의 면제】[1979.10.20]
(1) 내국세법 제21장에 의하여 부과되는 조세는, 미국의 이민 및 국적법(8U.S.C 1101 (a)(15)(H)(ii)) 제101조 (a)(15)(H)(ii)항에 따라 괌도의 입국 허가를 받은 비이민 목적의 외국인으로서, 일시적으로 괌도에 체재하는 동안, 한국의 거주자가 괌도에서 제공하는 용역의 대가로서 지급받는 임금에 대하여 적용되지 아니한다.

(2) 상기 (1)항에 규정된 면제는 내국세법 제3121조 (b)(18)항에 의하여 규정된 유사한 면제가 허용되는 기간동안만 계속된다.

제26조【외교관 및 영사관】[1979.10.20]
협약의 어느 규정도 국제법의 일반규칙 또는 특별협정의 규정에 의거한 외교관 및 영사관의 과세상의 특권에 영향을 주지 아니한다.

제27조【상호합의 절차】[1979.10.20]
(1) 일방 체약국 또는 양 체약국의 과세 처분이 일방 체약국의 거주자에 대하여 이 협약에 의거하지 아니하는 과세의 결과를 가져오거나 또는 가져올 것으로 동 거주자가 간주하는 경우에, 동 거주자는 양 체약국의 국내법에 의하여 규정된 구제절차에 불구하고, 그가 거주자로 되어 있는 체약국의 권한 있는 당국에 그 사건에 대한 이의를 신청할 수 있다. 동 청구를 받은 체약국의 권한있는 당국에 의하여 동 거주자의 청구가 이유있는 것으로 간주되는 경우에 동 체약국은 이 협약의 규정에 배치되는 과세를 회피할 목적으로 타방 체약국의 권한있는 당국과의 합의에 도달하도록 노력한다.

(2) 양 체약국의 권한있는 당국은 이 협약의 적용에 관하여 발생하는 곤란 또는 의문을 상호합의에 의하여 해결하도록 노력한다. 특히, 양 체약국의 권한있는 당국은 다음의 사항에 관하여 합의할 수 있다.

(a) 일방 체약국의 거주자와 타방 체약국내에 소재하는 동 거주자의 고정사업장에 산업상 또는 상업상의 이윤을 동일하게 귀속하는 것

(b) 일방 체약국의 조세 관할에 따라야 하는 인과 특수관계인 간에 소득, 비용공제.세액공제 또는 소득공제를 동일하게 할당하는 것

(d) 소득과 비용공제를 일관성있게 계산하는 것, 또는

(e) 이 협약에서 사용되는 용어를 동일하게 정의하는 것

(3) 양 체약국의 권한있는 당국은, 본조에서 의미하는 합의에 도달할 목적으로, 상호간에 직접적으로 의견교환을 할 수 있다. 합의에 도달할 목적으로 유익하다고 간주되는 경우에 권한있는 당국은 구두의 의견교환을 위하여 상호 회합할 수 있다.

(4) 권한있는 당국이 그러한 합의에 도달하는 경우에는, 동 합의에 따라 양 체약국이 동 소득에 대하여 과세하며 또한 조세의 환불 또는 세액공제를 허용한다.

제28조【정보교환】[1979.10.20]
1) 권한있는 당국은, 이 협약의 제 규정을 이행하고, 부정행위를 방지하며 또한 이 협약이 적용되는 조세에 관한 법령상 제 규정의 시행에 필요한 정보를 교환한다. 다만, 동 정보는 각 체약국의 법과 행정관례에 따라 그 조세에 관하여 입수할 수 있는 종류의 것일 것을 조건으로 한다.

(2) 상기와 같이 교환된 정보는, 다음의 경우를 제외하고, 비밀로 취급된다.

(a) 동 정보가 관계자에게 공개될 수 있는 경우, 또는

(b) 동 정보가 이 협약이 적용되는 조세의 부과, 징수, 강제집행 또는 동 조세에 관한 소송에 관련되는 공적기록의 일부가 될 수 있는 경우

(3) 공공정책에 위배되는 정보는 교환되어서는 아니된다.

(4) 일방 체약국의 권한있는 당국에 의하여 특별히 요청을 받는 경우에 타방 체약국의 권한있는 당국은, 증인의 증언과 미편집 원작 (서적, 서류, 진술, 기록, 계산서 또는 저작물을 포함함)의 사본형태로, 본 조에 따른 정보를 제공한다. 동 증언과 문서는 양 체약국의 법과 행정관례에 따라 그 조세에 관하여 입수할 수 있는 동일한 범위의 것으로 한다.

(5) 정보의 교환은 정규적으로 하거나 또는 특별한 사건에 관하여 요청을 받아 행한다. 양 체약국의 권한있는 당국은 정규적으로 제공되는 정보의 목록에 관하여 합의할 수 있다.

(6) 양 체약국의 권한있는 당국은, 제1조(대상조세) (1)항에 언급된 세법의 개정 및 제1조(대상조세) (2)항에 언급된 조세의 채택에 관하여, 그 개정 또는 새 법령을 적어도 연1회 송부함으로써 상호 통보한다.

(7) 양 체약국의 권한있는 당국은, 규정, 통첩 또는 사법적 결정의 형태에 관계없이, 각 체약국에 의한 이 협약의 적용에 관한 자료의 발간을 적어도 연1회 송부함으로써 상호 통보한다.

제29조【적용지역의 확대】[1979.10.20]
(1) 어느 일방 체약국은, 이 협약이 계속하여 유효한 기간동안 언제라도 외교경로를 통하여 타방 체약국에 대한 서면통고로써, 동 일방 체약국이 국세관계에 대하여 책임을 지며 또한 이 협약의 대상이 되고 있는 조세와 그 성질이 실질적으로 유사한 조세를 부과하는 지역의 전부 또는 일부(이 협약이 달리 적용되지 아니하는 지역)에 대하여, 이협약의 적용이, 전면으로 또는 부분으로 또는 특수한 경우의 특별한 적용을 위하여 필요하다고 간주되는 수정을 가하여 확대된다는 희망을 표시할 수 있다. 상기 지역에 관하여 상기 통고를 수락한다는 것을 외교경로를 통한 서면의 회신으로 타방 체약국이 상기 일방 체약국에 전달하고 또한 동 통고와 회신이 비준되며 또한 비준서가 교환되는 경우에 이 협약은, 전면으로 또는 부분으로 또는 동 통고에 명시된 대로 특수한 경우의 특별한 적용을 위하여 필요하다고 되는 수정을 가하여 동 통고에 표시된 지역에 대하여 적용되며 또한 동 통고에 명시된 일자에 발효한다. 그러한 지역에 관한 상기의 수락과 비준서의 교환이 없는 경우에는 이 협약이 어느 규정도 동 지역에 적용되지 아니한다.

(2) 상기 (1)항에 따른 적용확대에 관한 발효일자 후에는 언제라도, 체약국의 어느 일방은 외교경로를 통하여 타방 체약국에 대한 6개월전의 종료 통고로써 상기 (1)항에 따라 적용이 확대되었던 지역에 대한 이 협약의 적용을 종료시킬 수 있으며, 또한 그러한 경우에 이 협약은 6개월의 기간만료 후 그 익년 1월 1일부터 상기통고속에 표시한 지역에 대하여 적용되지 아니하며, 또한 효력을 가지지 아니하나, 한국, 미국 또는 상기(1)항에 따라 적용이 확대되었던 기타의 지역에 대한 이 협약의 계속적인 적용에 영향을 주지 아니한다.

(3) 한국 또는 미국에 의한 통고에 의하여 적용이 확대되는 지역에 관하여 이 협약을 적용함에 있어서 "한국" 또는 "미국"이라 함은, 경우에 따라, 동 지역을 언급하는 것으로 해석된다.

(4) 제32조(종료)의 규정에 따른 한국 또는 미국에 대한 이 협약의 종료는 양 체약국에 의하여 명시적으로 달리 합의되지 아니하는 한, 본조에 따라 한국 또는 미국에 의하여 협약의 적용이 확대되었던 지역에 대한 이 협약의 적용을 종료시킨다.

제30조【징수협조】[1979.10.20]
(1) 각 체약국은, 이 협약에 따라 타방 체약국에 의하여 부여된 조세의 면제 또는 경감세율이 그러한 이익을 받을 권리가 없는 자에 의하여 향유되어서는 아니되는 것을 보장하도록, 동 타방 체약국에 의하여 부과되는 조세를 동 타방 체약국을 대신하여 징수하는 것에 노력한다.

(2) 어느 경우에도 본조는, 조세의 징수에 관한 어느 체약국의 법, 행정관례 또는 공공정책과 상치되는 조치를 취할 의무를, 어느 체약국에 지우는 것으로 해석되어서는 아니된다.

제31조【발효】[1979.10.20]
이 협약은 비준되어야 하며, 비준서는 가능한 한 조속히 워싱턴에서 교환된다. 이 협약은 비준서의 교환으로부터 30일후에 효력을 발생하며, 아래와 같이 처음으로 시행된다.

(a) 원천징수세율 및 제25조 (사회보장세의 면제)에 관해서는 이 협약의 발효일자 이후 두 번째 달의 첫째 일자 이후에 지급되는 금액에 대하여 시행됨.

(b) 기타의 조세에 관해서는 이 협약의 발효일자의 그 익년 1월 1일 이후에 시작되는 과세연도부터 시행됨.

제32조【종료】[1979.10.20]
이 협약은 어느 체약국에 의하여 종료될 때까지 효력을 가진다. 외교경로를 통한 적어도 6개월전의 종료 통고를 행할 조건으로, 이 협약이 발효한 일자로부터 5년이 경과한 후에는 언제라도 어느 체약국은 협약을 종료시킬 수 있다. 그러한 경우에 이 협약은 6개월의 기간 만료후 그 익년 1월 1일 이후에 시작되는 과세연도의 소득(원천세와 사회보장세의 경우에는 지급된 금액)에 대하여 효력을 가지지 아니한다. 1976년 6월 4일 서울에서 한국어와 영어로 원본 2통을 작성하였다. 대한민국을 위하여 미합중국을 위하여

제안각서(1979.10.20)【】[1979.10.20]

교 환 공 문
(미국측 제안각서)

각하,
본인은 한국정부와 미국정부간에 서명된 소득에 관한 조세협약에 관하여 언급하는 영광을 가지는 바입니다. 동협약의 교섭과정에서 한국대표단은, 첫째, 미국의 자본과 기술에 대한 이전을 촉진시키는데 특별한 유인이 되는 조항들을 동 협약에 보다 더 포함시킬 필요성을 강조하였으며 또한 둘째, 동 협약은 그 제1조 (1)에 언급된 조세에 관련하여 부과되는 한국의 방위세에 적용됨을 진술하였습니다.

미국대표단은 특별한 투자유인을 위한 조항들에 동의할 수가 없었지만, 본인은 한국에의 투자증대에 관하여 귀국정부가 부여하고 있는 중요성을 본국정부가 인정하고 있음을 귀하에게 보장하고자 합니다. 따라서 사정이 허락하는 경우에, 미국정부는 미국의 조세제도가 한국정부에 의하여 제공되는 유인에 관여하는 것을 극소화시키고 또한 여타의 개발도 상국에 대한 미국정부의 소득세정책과 부합되는 조항들을 동 협약에 반영시킬 목적으로 토의를 재개할 용의가 되어 있을 것입니다.

본인은 협약 제1조 (1)의 “한국의 조세”에는 동조에 언급된 조세에 부과되는 한국의 방위세가 포함되는 것으로 대한민국 정부가 해석한다는 귀하의 확인에 감사하고자 합니다.
각하에게 본인의 최고의 경의를 표하는 바입니다.

대한민국 외무부장관 박 동 진 귀하 /서 명/

미합중국 대사 리챠드ㆍ엘ㆍ스나이더

(한국측 회답각서)
1976년 6월 4일

각하,
본인은 미국의 대한투자증대 및 조세협약 제1조 (1)에 언급된 조세에 관련하여 부과되는 한국의 방위세에 대한 동 협약의 적용에 관한 각하의 1976년 6월 4일자의 서한을 접수, 확인하는 영광을 가지는 바입니다.

본인은 사정이 허락하는 경우에, 미국의 조세제도가 한국정부에 의하여 제공되는 유인에 관여하는 것을 극소화시키고 또한 여타의 개발도상국에 대한 미국정부의 소득세정책과 부합되는 조항들을 동 협약에 반영시킬 목적으로 미국정부가 토의를 재개할 용의가 되어 있다는 것에 유의하는 영광을 또한 가지는 바입니다.
본인은 조세협약 제1조 (1)에 언급된 한국의 조세에 정의에는 동조에 언급된 조세에 부과되는 한국의 방위세가 포함됨을 확인하는 영광을 또한 가지는 바입니다.
각하에게 본인의 최고의 경의를 표하는 바입니다.

대한민국주재 미합중국특명전권대사 리챠드ㆍ엘ㆍ스나이더 각하 /서 명/
외무부장관 박 동 진
Technical Explanation【】[1979.10.20]

Signed at Seoul June 4, 1976 Entered into force October 20, 1979 The Government of the Republic of Korea and the Government of the United States of America, desiring to conclude a convention for the avoidance of double taxation of income and the prevention of fiscal evasion and the encouragement of international trade and investment, have appointed for that purpose as their respective Plenipotentiaries : The Government of the Republic of Korea: Excellency Park Tong-Jin Minister of Foreign Affairs of the Republic of Korea The Government of the United States of America: His Excellency Richard L. Sneider Ambassador Extraordinary and Plenipotentiary of the United States of America to the Republic of Korea who having communicated to each other their full powers, found in good and due form, have agreed upon the following articles.

1【TAXES COVERED】[1979.10.20]
(1) The taxes which are the subject of this Convention are: (a) In the case of Korea, the income tax and the corporation tax (the Korean tax); and (b) In the case of the United States the Federal income taxes imposed by the Internal Revenue Code (the United States tax). (2) This Convention shall also apply to taxes substantially similar to those covered by paragraph (1) which are imposed in addition to, or in place of existing taxes after the date of signature of this Convention. (3) For the purpose of Article 7 (Nondiscrimination), the Convention shall also apply to taxes of every kind imposed at the National, state or local level. For the purpose of Article 28 (Exchange of Information) this Convention shall also apply to taxes of every kind imposed at the National level.

2【GENERAL DEFINITIONS】[1979.10.20]
(1) In this Convention, unless the context otherwise requires: (a) (i) The term "Korea" means the Republic of Korea; and (ii) When used in a geographical sense, the term "Korea" means all the territory in which the laws relating to Korean tax are in force. The term also includes : (A) The territorial sea thereof; and (B) The seabed and subsoil of the submarine areas adjacent to the coast thereof, but beyond the territorial sea, over which Korea exercises sovereign rights, in accordance with international law, for the purpose of exploration of the natural resources of such areas, but only to the extent that the person, property, or activity to which this Convention is being applied is connected with such exploration or exploitation; (b) (i) The term "United States" means the United States of America; and (ii) When used in a geographical sense, the term "United States" means the states thereof and the District of Columbia, Such term also includes : (A) The territorial sea thereof ; and (B) The seabed and subsoil of the submarine areas adjacent to the coast thereof but beyond the territorial sea, over which the United States exercises sovereign rights, in accordance with international law, for the purpose of exploration and exploitation of the natural resources of such areas, but only to the extent that the person, property, or activity to which the Convention is being applied is connected with such exploration or exploitation ; (c) The term "Contracting State" means Korea or the United Slates, as the context requires ; (d) The term "person" includes an individual, a partnership a corporation, an estate, a trust, or any body of persons; (e) (i) The term "Korea corporation" or "corporation of Korea" means a corporation (other than a United States corporation) which has its head or main office in Korea, or any entity treated as a Korean corporation for Korean tax purposes ; and (ii) The term "United States corporation" or "corporation of the United States" means a corporation which is created or organized under the laws of the United States or any state thereof or the District of Columbia, or any unincorporated entity treated as a United States corporation for United States tax purpose ; (f) The term "competent authority" means : (i) In the case of Korea, the Minister of Finance or his delegate; and (ii) In the case of the United States, the Secretary of the Treasury or his delegate : (g) The term "State" means any .national State, whether or not one of the Contracting States; (h) The term "citizen" means: (i) In the case of Korea, a national of Korea; and (ii) In the case of the United States, a citizen of the United States. (2) Any other term used in this Convention and not defined in this Convention shall, unless the context otherwise would have the meaning which it has under the laws of the Contracting state whose tax is being determined. Notwithstanding the preceding sentence, if the meaning of such a term under the laws of one Contracting State is different from the meaning of the term under the laws of the other Contracting State, or if the meaning of such a term is not readily determinable under the laws of one of the Contracting States, the competent authorities of the Contracting States may in order to prevent doble taxation or to further any other purpose of this Convention, establish a common meaning of the term for the purposes of this Convention.

3【FISCAL DOMICILE】[1979.10.20]
(1) In this Convention: (a) The term "resident of Korea" means: (i) A Korean corporation; and (ii) Any other person (except a corporation or any entity treated under Korean law as a corporation) resident in Korea for purposes of its tax, but in the case of a Person acting as a partner or fiduciary only to the extent that the income derived by such person is subject to Korean tax as the income of a resident; (b) The term "resident of the United States" means: (i) A United States corporation; and (ii) Any other person (except a corporation or any entity treated under United States law as a corporation) resident in the United States for purposes of its tax, but in the case of a person acting as a partner or fiduciary only to the extent that the income derived by such person is subject to United States tax as the income of a resident : (c) In determining the residence of a partnership which makes a payment, a partnership shall be considered a resident of the State under the laws of which it was created or organized. (2) Where by reason of the provisions of paragraph (1) an individual resident of both Contracting States : (a) He shall be deemed to be a resident of that Contracting State in which he maintains his permanent home ; (b) If he has a permanent home in both Contracting States or in neither of the Contracting States, he shall be deemed to be a resident of that Contracting State with which his personal and economic relations are closest (center of vital interests) ; (c) If his center of vital interests is in neither of the Contracting States or cannot be determined, he shall be deemed to be a resident of that Contracting State in which he has a habitual abode : (d) If he has a habitual abode in both Contracting States or in neither of the Contracting States, he shall be deemed to be a resident of the Contracting State of which he is a citizen; and (e) If he is a citizen of both Contracting State or of neither Contracting State the competent authorities of the Contracting States shall settle the question by mutual agreement. For the purpose of this paragraph, a permanent home in the place where an individual dwells with his family. (3) An individual who is deemed to be a resident of one of the Contracting States and not a resident of the other Contracting State by reason of the provisions of paragraph (2) shall be deemed to be a resident only of the first-mentioned Contracting State for all purposes of this Convention, including Article 4 (General Rules of Taxation).

4【GENERAL RULES OF TAXATION】[1979.10.20]
(1) A resident of one of the Contracting States may be taxed by the other Contracting State on any income from sources within that other Contracting State and only on such income subject to any limitations set forth in this Convention. For this purpose, the rules set forth in Article 6 (Source of income) shall be applied to determine the source of income. (2) The provisions of this Convention shall not be construed to restrict in any manner any exclusion, exemption, deduction, credit, or other allowance now or hereafter accorded : (a) By the laws of one of the Contracting States in the determination of the tax imposed by that Contracting States; (b) By any other agreement between the Contracting States. (3) The provisions of this convention shall nor affect Korean law so as to deny benefits accorded residents of the United States under the provisions of the Korean Foreign Capital Inducement Law No. 2598 of March 12, 1973 as amended or any similar law to encourage investment in Korea. (4) Notwithstanding any provisions of this Convention except paragraph (5) of this Article, a Contracting State may tax a citizen or resident of that Contracting State as if this Convention had not come into effect. (5) The provisions of paragraph (4) shall not affect : (a) The benefits conferred by a Contracting State under Article 5 (Relief from Double Taxation), 7 (Nondiscrimination), 24 (Social Security Payments), and 27 (Mutual Agreement Procedure) ; and (b) The benefits conferred by a Contracting State under Articles 20(Teachers), 21 (Students and Trainees) and 22 (Governmental Functions), upon individuals who are neither citizens of, nor have immigrant status in, that Contracting State. (6) The competent authorities of the two Contracting States may prescribe regulations necessary to carry out the provisions of this Convention. (7) There shall be allowed, for purposes of United States tax, in the case of a resident of Korea who is not a resident of the United States (other than an officer or employee of the Government of Korea or local authority thereof), as long as the United States Internal Revenue Code provides only one personal exemption, a deduction for personal exemptions, subject to the conditions prescribed in sections 151 through 154 of the Internal Revenue Code as in effect on the date of the signature of this Convention, for the spouse of the taxpayer and for each child of the taxpayer present in the United States and residing with him in the United States at any time during the taxable year, but such additional deduction shall not exceed that proportion thereof which the taxpayer's gross income from source within the United States which is treated as effectively connected with the conduct of a trade or business within the United States within the meaning of section 864(c) of the Internal Revenue Code for the taxpayer's taxable year bears to his entire income from all source for such taxable year. (8) The United States may impose its personal holding company tax and its accumulated earnings tax notwithstanding any provision of this Convention. However, a Korean corporation shall be exempt from the United States personal holding company tax in any taxable year if all of its stock is owned, directly or indirectly, by one or more individuals who are residents of Korea (and not citizens of the United States) for that entire year. A Korean corporation shall be exempt from the United States accumulated earnings tax in any taxable year unless such corporation is engaged in trade or business in the United States through a permanent establishment at any time during such year.

5【RELIEF FROM DOUBLE TAXATION】[1979.10.20]
Double taxation of income shall be avoided in the following manner: (1) In accordance with the provisions and subject to the limitations of the law of Korea (as it may be amended from time to time without changing the principles hereof), Korea shall allow to a citizen or resident of Korea as a credit against Korean tax the appropriate amount of income taxes paid to the United Stated and, in the case of a Korean corporation owning at least 10 percent of the voting power of the United States corporation from which it receives dividends in any taxable year, shall allow credit for the appropriate amount of taxes paid to the United States by the United States corporation paying such dividends with respect to the profits out of which such dividends are paid. Such appropriate amount shall be based upon the amount of tax paid to the United States but shall not exceed that portion of Korean tax which such citizen's or resident's net income from sources within the United States bears to his entire net income for the same taxable year. For the purpose of applying the Korean credit in relation to taxes paid to the United States, the rules set forth in Article 6 (Source of Income) shall be applied to determine the source of income ; (2) In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended from time to time without changing the principles hereof), the United States shall allow to a citizen or resident of the Untied States as a credit against the United Stated tax the appropriate amount of Korean tax and, in the case of a United States corporation owning at least, 10 percent of the voting power of a Korean corporation from which it received dividends in any taxable year, shall allow credit for the appropriate amount of taxes paid to Korea by the Korean corporation paying such dividends with respect to the profits out of which such dividends are paid. Such appropriate amount shall be based upon the amount of tax paid to Korea but the credit shall not exceed the limitations (for the purpose limiting the credit to the United States tax on income from sources within Korea or on income from sources outside the United States) provided by United States law for the taxable year. For the purpose of applying the United States credit in relation to taxes paid to Korea, the rules set forth in Article 6 (Source of Income) shall be applied to determine the source of income.

6【SOURCE OF INCOME】[1979.10.20]
For purposes of this Convention : (1) Dividends shall be treated as income from sources within a Contracting State only if paid by a corporation of that Contracting State. (2) Interest shall be treated as income from sources within one Contracting States only if paid by that Contracting State, a political subdivision or a local authority thereof, or by a resident of that Contracting State. Notwithstanding the preceding sentence : (a) If the person paying the interest (whether or not he is a resident of one of the Contracting States) has a permanent establishment in one of the Contracting States in connection with which the indebtedness on which the interest is paid was incurred and such interest is borne by such permanent establishment ; or (b) If the person paying the interest is a resident of one of the Contracting States and has a permanent establishment in a State other than a Contracting State in connection with which the indebtedness on which the interest is paid was incurred and such interest is paid to a resident of the other Contracting State, and such interest is borne by such permanent establishment, such interest shall be deemed to be from sources within the State in which the permanent establishment is situated. (3) Royalties described in paragraph (4) of Article 14 (Royalties) for the use of, or the right to use, property (other than as provided in paragraph (5) with respect to ships or aircraft) described in such paragraph shall be treated as income from sources within one of the Contracting States only if paid for the use of, or the right to use, such property within that Contracting State. (4) Income from real property and royalties from the operation of mines, quarries, or other natural resources (including gains derived from the sale of such property or the right giving rise to such royalties) shall be treated as in come from sources within one of the Counteractingly States only if such property is located in that Contracting State. (5) Income from the rental of tangible property (movable property) shall be treated as income from sources within one of the Contracting States only if such property is located in that Contracting State. Income from the rental of ships or aircraft derived by a person not engaged in the operation of ships or aircraft in international traffic shall be treated as income from sources within a Contracting State only if the lessee is a resident of that Contracting State. (6) Income received by an individual for his performance of labor or personal services, whether as an employee or in an independent capacity, or for furnishing the personal services of other person and income received by a corporation for furnishing the personal services of its employees or others, shall be treated as income from sources within one of the Contracting States only to the extent that such services are performed in that Contracting State. Income from personal services performed aboard ships or aircraft operated by a resident of one of the Contracting States in international traffic shall be treated as income from sources within that Contracting State if rendered by a member of the regular complement of the ship or aircraft. For purposes of this paragraph, income from labor or personal services includes pensions (as defined in paragraph (3) of Article 23 (private Pensions and Annuities) paid in respect of such services. Notwithstanding the preceding provisions of this paragraph remuneration described in Article 22 (Governmental Functions, and payments described in Article 24(Social Security Payments) shall be treated as income from sources within one of the Contracting States only if paid by or from the public fund of that Contracting State or local authority thereof. (7) Income from the purchase and sale of intangible or, tangible personal (including movable) property (other than gain defined as royalties by paragraph (4) (b) of Article 14 (Royalties)) shall be treated as income from sources within one of the Contracting States only if such property is sold in that Contracting State. (8) Notwithstanding paragraphs (1) through (7), industrial or commercial profits which are attributable to a permanent establishment which the recipient, a resident of one of the Contracting States, has in the other Contracting State, including income derived from real property and natural resources and dividends, interest, royalties (as defined in paragraph (4) of Article 14(Royalties)), and capital gains, but only if the rights or property giving rise to such income, dividends, interest, royalties, or capital gains are effectively connected with such permanent establishment, shall be treated as income from sources within that other Contracting State. (9) The source of any item of income to which paragraphs (1) through (8) of this Article are not applicable shall be determined by each of the Contracting States in accordance with its own law. Notwithstanding the preceding sentence, if the source of any item of income under the laws of one Contracting State is different from the source of such item of income under the laws of the other Contracting State or if the source of such income is not readily determinable under the laws of one of the Contracting States, the competent authorities of the Contracting States may, in order to prevent double taxation or further any other purpose of this Convention, establish a common source of the item of income for purposes of this Convention.

7【NON-DISCRIMINATION】[1979.10.20]
(1) A citizen of one of the Contracting States who is a resident of the other Contracting State shall not be subjected in that other contracting State to more burdensome taxes than a citizen of that other Contracting State who is a resident thereof. (2) A permanent establishment which a resident of one of the Contracting States has in the other Contracting State shall not be subjected in that other Contracting State to more burdensome taxes than a resident of that other Contracting State carrying on the same activities. This paragraph shall not be construed as obliging one of the Contracting States to grant to individual residents of the other Contracting State any personal allowances, reliefs, or deductions for taxation purposes on account of civil status or family responsibilities which the first-mentioned Contracting State grants to its own individual residents. (3) A corporation of one of the Contracting States, the capital of which is wholly or partly owned or controlled directly or indirectly, by one or more residents of the her Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which a corporation of the first-mentioned Contracting State carrying on the same activities, the capital of which is wholly owned or controlled by one or more residents of the first- mentioned Contracting State, is or may be subjected.

8【BUSINESS PROFITS】[1979.10.20]
(1) Industrial or commercial profits of a resident of one of the Contracting States shall be exempt from tax by the other Contracting State unless such resident is engaged in industrial or commercial activity in that other Contracting State through a permanent establishment situated therein. If such resident is so engaged, tax may be imposed by that other Contracting State on the industrial or commercial profits of such resident but only on so much of such profits as are attributable to the permanent establishment. (2) Where a resident of one of the Contracting States is engaged in industrial or commercial activity in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to the permanent establishment the industrial or commercial profits which would be attributable to such permanent establishment if such permanent establishment were an independent entity engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the resident of which it is a permanent establishment. (3) In the determination of the industrial or commercial profits of a permanent establishment, there shall be allowed as deductions expenses which are reasonably connected with such profits, including executive and general administrative expenses, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere. (4) No profits shall be attributed to a permanent establishment of a resident of one of the Contracting States in other Contracting State merely by reason of the purchase of goods or merchandise by that permanent establishment, or by the resident of which it is a permanent establishment, for the account of that resident. (5) The term "industrial or commercial activity" means the active conduct of a trade or business. It includes the conduct of manufacturing, mercantile, insurance, banking, financing, agricultural, fishing, or mining activities, the operation of ships or aircraft, the furnishing of services, and the rental of tangible personal property (including ships or aircraft). Such term does not include the performance of personal services by an individual either as an employee or in an independent capacity. (6) (a) The term "industrial or commercial profits" means income derived from industrial or commercial activity, and income derived from real property and natural resources, and dividends, interest, royalties (as defined in paragraph (4) of Article 14 (Royalties)) and capital gains but only if the property or rights giving rise to such income, dividends, interest, royalties, or capital gains are effectively connected with a permanent establishment which the recipient, being a resident of one of the Contracting States, has in the other Contracting State, whether or not such income is derived from industrial or commercial activity. (b) To determine whether property or rights are effectively connected with a permanent establishment, the factors taken into account shall include whether the rights or property are used in or held for use in carrying on industrial or commercial activity through such permanent establishment and whether the activities carried on through such permanent establishment were a material factor in the realization of the income from such property or rights. For this purpose, due regard shall be given to whether or not such property or rights or such income were accounted for through such permanent establishment. (7) Where industrial or commercial profits include items of income which are dealt with separately in other articles of this Convention, the provisions of those articles shall, except as otherwise provided therein, supersede the provisions of this Article.

9【PERMANENT ESTABLISHMENT】[1979.10.20]
(1) For purposes of this Convention, the term "permanent establishment" means a fixed place of business through which a resident of one of the Contracting States engages in industrial or commercial activity. (2) The term "fixed place of business" includes but is not limited to: (a) A branch; (b) An office; (c) A factory; (d) A workshop; (e) A warehouse ; (f) A store or other sales outlet; (g) A mine, quarry, or other place of extraction of natural resources; and (h) A building site or construction or installation project which exists for more than 6 months. (3) Notwithstanding paragraphs (1) and (2), a permanent establishment shall not include a fixed place of business used only for one or more of the following: (a) The use of facilities for the purpose of storage, display, or delivery of goods or merchandise belonging to the resident ; (b) The maintenance of a stock of goods or merchandise belonging to the resident for the purpose of storage, display, or deliverer ; (c) The maintenance of a stock of goods or merchandise belonging to the resident for the purpose of processing by another person ; (d) The maintenance of a fixed place of business for the purpose of purchasing goods or merchandise, or for collecting information, for the resident ; (e) The maintenance of a fixed place of business for the purpose of advertising, for the supply of information, for scientific research, or for similar activities which have a preparatory or auxiliary character, for the resident; or (f) The maintenance of a building site or construction or installation project which does not exist for more than 6 months. (4) Even if a resident of one of the Contracting States does not have a permanent establishment in the other Contracting State under paragraphs (1) through (3) of this Article, nevertheless he shall by deemed to have a permanent establishment in that other Contracting State if he engages in trade or business in that other Contracting State through an agent who: (a) Has an authority to conclude contracts in the name of that resident and regularly exercises that authority in that other Contracting State, unless the exercise of the authority is limited to the purchase of goods or merchandise for the account of the resident; or (b) Maintains in that other Contracting State a stock of goods or merchandise belonging to that resident from which he regularly fills orders or makes deliveries. (5) Notwithstanding subparagraphs (a), (c) and (d) of paragraph (3), if a resident of one of the Contracting States has a fixed place of business in the other Contracting State and goods or merchandise are either: (a) Subjected to processing in that other Contracting State by another person (whether or not purchased in that other Contracting State) ; (b) Purchased in that other Contracting State (and such goods or merchandise are not subjected to processing outside that other Contracting State) ; such resident shall be considered to have a permanent establishment in that other Contracting State, if all or part of such goods or merchandise is sold by or on behalf of such resident for use, consumption, or disposition in that other Contracting State. (6) Notwithstanding the provisions of paragraphs (4) and (5), a resident of one of the Contracting States shall not be deemed to have a permanent establishment in the other Contracting State merely because such resident engages in industrial or commercial activity in that other Contracting State through a broker, general commission agent or any other agent of an independent status, where such broker or agent is acting in the ordinary course of his business. (7) The fact that a resident of one of the Contracting States is a related person (as defined under Article 11 (Related Persons)) with respect to a resident of the other Contracting State or with respect to a person who engages in industrial or commercial activity in that other Contracting State (whether through a permanent establishment or otherwise) shall not be taken into account in determining whether that resident of the first-mentioned Contracting State has a permanent establishment in that other Contracting State. (8) The principles set forth in paragraphs (1) through (7) shall be applied in determining for the purpose of this Convention whether there is a permanent establishment in a State other than one of the Contracting States or whether a person other than a resident of one of the Contracting States has a permanent establishment in one of the Contracting States.

10【SHIPPING AND AIR TRANSPORT】[1979.10.20]
Notwithstanding Article 8 (Business Profits), income which a resident of one of the Contracting States derives from the operation in international traffic of ships or aircraft shall be exempt from tax by the other Contracting State. For purposes of this Article, income derived from the operation in international traffic of ships or aircraft includes income incidental to such operation, such as income derived from the use or lease of containers, trailers for the inland transportation of containers and other related equipment, but does not include other income from the inland transportation of containers.

11【RELATED PERSONS】[1979.10.20]
(1) Where a person subject to the taxing jurisdiction of one of the Contracting States and any other person are related and where such related persons make arrangement or impose conditions between themselves which are different from those which would be made between independent persons, any income, deductions, credits, or allowances which would, but for those arrangements or conditions, have been taken into account in computing the income (or loss) of, or the tax payable by, one of such persons, may be taken into account in computing the amount of the income subject to tax and the taxes payable by such person. (2) For the purposes of this Convention, a person is related to another person if either person owns or controls directly or indirectly the other, or if any third person or persons owns or controls directly or indirectly both. for this purpose, the term "control" includes any kind of control, whether or not legally enforceable, and however exercised or exercisable.

12【DIVIDENDS】[1979.10.20]
(1) Dividends derived from sources within one of the other Contracting State may be taxed by both Contracting States.

(2) The rate of tax imposed by one of the Contracting States on dividends derived from sources within that Contracting State by a resident of the other Contracting State shall not exceed:
(a) 15 percent of the gross amount of the dividend; or
(b) When the recipient is a corporation, 10 percent of the gross amount of the dividend if:
(i) During the part of the paying corporation's taxable year which precedes the date of payment of the dividend and during the whole of its prior taxable year (if any), at least 10 percent of the outstanding shares of the voting stock of the paying corporation was owned by the recipient corporation; and
(ii) Not more than 25 percent of the gross income of the paying corporation for such prior taxable year (if any) consists of interest or dividends (other titian interest derived from the conduct of a banking, insurance, or financing business and dividends or interest received from subsidiary corporations, 50 percent or more of the outstanding shares of the voting stock of which is owned by the paying corporation at the time such dividends or interest is received.)

(3) Paragraph (2) shall not apply if the recipient of the dividends, being a resident of one of the Contracting States, has a permanent establishment in the other Contracting State and the shares with respect to which the dividends are paid are effectively connected with such permanent establishment. In such a case, Paragraph (6) (a) of Article 8 (Business Profits) shall apply.

13【INTEREST】[1979.10.20]
(1) Interest derived from sources within one of the Contracting States by a resident of the other Contracting State may be taxed by both Contracting States. (2) The rate of tax imposed by one of the Contracting States on interest derived from source within that Contracting State by a resident of the other Contracting State shall not exceed 12 percent of the gross amount thereof. (3) Notwithstanding paragraph (1) and (2), interest derived from sources within one of the Contracting States shall be exempt from tax by that Contracting State if it is beneficially derived by the Government of the other Contracting State, by any local authority thereof, the central bank of that other Contracting State, or any instrumentality wholly owned by that Government or that central bank or both, not subject to tax by that other Contracting State on its income. (4) Paragraph (2) shall not apply if the recipient of the interest, being a resident of one of the Contracting States, has a permanent establishment in the other Contracting State and the indebtedness giving rise to the interest is effectively connected with such permanent establishment. In such case, paragraph (6) (a) of Article 8 (Business Profits) shall apply. (5) Where any amount designated as interest paid to any related person exceeds an amount which would have been paid to an unrelated person, the provisions of this Article shall apply only to so much of the interest as would have been paid to an unrelated person. In such a case the excess payment may be taxed by each Contracting State according to its own law, including the provisions of this Convention where applicable. (6) The term "interest" as used in this Convention means income from bonds, debentures, Government securities, notes, or other evidences of indebtedness, whether or not secured and whether or not carrying a right to participate in profits, and debt-claims of every kind as well as all other income which, under the taxation law of the Contracting State in which the income has its source, is assimilated to income from money lent.

14【ROYALTIES】[1979.10.20]
(1) The tax imposed by one of the Contracting States on royalties derived from source within that Contracting State by a resident of the other Contracting State shall not exceed 15 percent of the gross amount thereof, except as provided in paragraphs (2) and (3). (2) Royalties derived from copyrights or rights to produce or reproduce any literary, dramatic, musical, or artistic work, by a resident of one Contracting State, as well as royalties received as consideration of the use of, or the right to use, motion picture films including films and tapes used for radio or television broadcasting, may not be taxed by the other Contracting State at a rate of tax which exceeds 10 percent of the gross amount of such royalties. (3) Paragraph (1) and (2) shall not apply if the recipient of the royalty, being a resident of one of the Contracting States, has in the other Contracting State a permanent establishment and the right or property giving rise to the royalties is effectively connected with such permanent establishment. In such a case, paragraph (6) (a) of Article 8 (Business Profits) shall apply. (4) The term "royalties" as used in this Article means: (a) Payment of any kind made as consideration for the use of, or the right to use, copyrights of literary, artistic, or scientific works, copy rights of motion picture films or films or tapes used for radio or television broadcasting, patents, designs, models, plans, secret processes or formulae, trademarks, or other like property or rights, or knowledge, experience, or skill (know-how), or ships or aircraft (but only if the lessor is a person not engaged in the operation in international traffic of ships or aircraft) ; and (b) Gains derived from the sale, exchange, or other disposition of any such property or rights (other than ships or aircraft) to the extent that the amounts realized on such sale, exchange, or other disposition for consideration are contingent on the productivity, use, or disposition or such property or rights, The term does not include any royalties, rentals or other amount paid in respect of the operation of mines, quarries, or other natural resources. (5) Where an amount is paid to a related person which would be treated as royalty but for the fact that it exceeds an amount which would have been paid to an unrelated person, the provisions of this Article shall apply only to so much of the royalty as would have been paid to an unrelated person. In such a case, the excess payment may be taxed by each Contracting State according to its own law, including the provisions of this Convention where applicable.

15【INCOME FROM REAL PROPERTY】[1979.10.20]
(1) Income from real property, including royalties and other payments in respect of the exploitation of natural resources and gains derived from the sale, exchange, or other disposition of such property or of the right giving rise to such royalties or other payments, may be taxed by the Contracting State in which such real property or natural resources are situated. For purposes of this Convention, interest on indebtedness secured by real property or secured by a right giving rise to royalties or other payments in respect of the exploitation of natural resources shall not be regarded as income from real property. (2) Paragraph (1) shall apply to income derived from the usufruct, direct use, letting, or use in any other form of real property

16【CAPITAL GAINS】[1979.10.20]
(1) A resident of one of the Contracting States shall be exempt from tax by the other Contracting State on gains from the sale, exchange, or other disposition of capital assets unless ; (a) The gain is derived by a resident of one of the Contracting States from the sale, exchange, or other disposition of property described in Article 15 (Income from Real Property) situated within the other Contracting State; (b) The recipient of the gain, being a resident of one of the Contracting States, has a permanent establishment in the other Contracting State and the property giving rise to the gain is effectively connected with such permanent establishment ; or (c) The recipient of the gain, being an individual who is a resident of one of the Contracting States : (i) Maintains a fixed base in the other Contracting State for a period or periods aggregating 183 days or more during the taxable year and the property giving rise to such gains is effectively connected with such fixed base; or (ii) Is present in the other Contracting State for a period or periods aggregating 183 days or more during the taxable year. (2) In the case of gains described in paragraph (1) (a), the provisions of Article 15 (Income from Real Property) shall apply. In the case of gains described in paragraph (1) (b), the provisions of Article 8(Business Profits) shall apply.

17【INVESTMENT OR HOLDING COMPANIES】[1979.10.20]
A corporation of one of the Contracting States deriving dividends, interest, royalties, or capital gains from sources within the other Contracting State shall not be entitled to the benefits of Article 12(Dividends), 13(Interest), 14(Royalties), or 16 (Capital Gains) if: (a) By reason of special measures the tax imposed on such corporation by the first-mentioned Contracting State with respect so such dividends, interest, royalties, or capital gains is substantially less than the tax generally imposed by such Contracting State on corporate profits ; and (b) 25 percent or more of the capital of such corporation is held of record or is otherwise determined, after consultation between the competent authorities of the Contracting States, to be owned directly or indirectly, by one or more persons who are not individual residents of the first-mentioned Contracting State (or, in the case of a Korean corporation, who are citizens of the United States).

18【INDEPENDENT PERSONAL SERVICES】[1979.10.20]
(1) Income derived by an individual who is a resident of one of the Contracting States from the performance of personal services in an independent capacity, may be taxed by that Contracting State. Except as provided in paragraph (2), such income shall be exempt from tax by the other Contracting State. (2) Income derived by an individual who is a resident of one of the Contracting States from the performance of personal services in an independent capacity in the other Contracting State may be taxed by that other Contracting State, if: (a) The individual is present in that other Contracting State for a period or periods aggregating 183 days or more in the taxable year; (b) Such income exceeds 3,000 United States dollars or its equivalent in Korean won in a taxable year; or (c) The individual maintains a fixed base in that other Contracting State for a period or periods aggregating 183 days or more in the taxable year, but only so much of his income as is attributable to such fixed base.

19【DEPENDENT PERSONAL SERVICES】[1979.10.20]
(1) Wages, salaries, and similar remuneration derived by an individual who is a resident of one of the Contracting States from labor or personas services performed as an employee, including remuneration from services performed by an officer of a corporation, may be taxed by that Contracting State. Except as provided by paragraph (2) such remuneration derived from sources within the other Contracting State may also be taxed by that other Contracting State. (2) Remuneration described in paragraph (1) derived by an individual who is a resident of one of the Contracting States shall be exempt from tax by the other States if: (a) He is present in that other Contracting State for a period or periods aggregating less than 183 days in the taxable year; (b) He is an employee of a resident of the first mentioned Contracting State or of a permanent establishment maintained in the first-mentioned Contracting State; (c) The remuneration is not borne as such by a permanent establishment which the employer has in that other Contracting State; and (d) Such income does not exceed 3,000 United States dollars or its equivalent in Korean won. (3) Notwithstanding paragraph (2), remuneration derived by an individual from the performance of labor or personal services as an employee aboard ships or aircraft operated by a resident of one of the Contracting States in international traffic shall be exempt from tax by the other Contracting State if such individual is a member of the regular complement of the ship or aircraft.

20【TEACHERS】[1979.10.20]
(1) Where a resident of one of the Contracting States is invited by the Government of the other Contracting State, a political subdivision, or local authority thereof, or by a university or other recognized educational institution in that other Contracting State to come to that other Contracting State for a period not expected to exceed 2 years for the purpose of teaching or engaging in research, or both, at a university or other recognized educational institution and such resident comes to that other Contracting State primarily for such purpose, his income from personal services for teaching or research at such university or educational institution shall be exempt from tax by that other Contracting State for a period not exceeding 2 years from the date of his arrival in that other Contracting State. (2) This Article shall not apply to income from research if such research is undertaken not in the public interest primarily for the private benefit of a specific person or persons.

21【STUDENTS AND TRAINEES】[1979.10.20]
(1) (a) An individual who is a resident of one of the Contracting States at the time he becomes temporarily present in the other Contracting State and who is temporarily present in that other Contracting State for the primary purpose of : (j) Studying at a university or other recognized educational institution in that other Contracting State; or (ii) Securing training required to qualify him to practice a profession or professional specialty; or (iii) Studying or doing research as a recipient of a grant, allowance, or award from a governmental, religious, charitable, scientific, literary, or educational organization, shall be exempt from tax by that other Contracting State with respect to amounts described in subparagraph (b) for a period not exceeding 5 taxable years from the date of his arrival in that other Contracting State. (b) The amounts referred to in subparagraph (a) are: (i) Remittances from abroad for the purpose of his maintenance, education, study research, or training ; (ii) The grant, allowance, or award; and (iii) Income from personal services performed in that other Contracting State in an amount not in excess of 2,000 United States dollars or its equivalent in Korean won for any taxable year. (2) An individual who is a resident of one of the Contracting States at the time he becomes temporarily present in the other Contracting State and who is temporarily present in that other Contracting State as an employee of, or under contract with, a resident of the first-mentioned Contracting State, for the primary purpose of : (a) Acquiring technical, professional, or business experience from a person other than that resident of the first-mentioned Contracting State or other than a person related to such resident; or (b) Studying at a university or other recognized educational institution in that other Contracting State, shall be exempt from tax by that other Contracting State for a period not exceeding 1 year with respect to his income from personal services in an aggregate amount not in excess of 5,000 United States dollars or its equivalent in Korean won. (3) An individual who is a resident of one of the Contracting States at the time he becomes temporarily present in the other Contracting State and who is temporarily present in that other Contracting State for a period not exceeding 1 year, as a participant in a program sponsored by the Government of that other Contracting State, for the primary purpose of training, research, or study, shall be exempt from tax by that other Contracting State with respect to his income from personal services in respect of such training, research, or study performed in that other Contracting State in an aggregate amount not in excess of 10,000 United States dollars or its equivalent in Korean won. (4) The benefits provided under Article 20 (Teachers) and paragraph (1) of this Article shall, when taken together, extend only for such period of time, not to exceed 5 taxable years from the date of arrival of the individual claiming such benefits, as may reasonably or customarily be required to effectuate the purpose of the visit.

22【GOVERNMENTAL FUNCTIONS】[1979.10.20]
Wages, salaries, and similar remuneration including pensions, annuities, or similar benefits, paid from public funds of one of the Contracting States to a citizen of that Contracting State for labor or personal services performed as an employee of that Contracting State or an instrumentality thereof in the discharge of governmental functions shall be exempt from tax by the other contracting State.

23【】[1979.10.20]
(1) Except as provided in Article 22 (Governmental Functions), pensions and other similar remuneration paid to an individual who is a resident of one of the Contracting States in consideration of past employment shall be taxable only in that Contracting State. (2) Alimony and annuities paid to an individual who is a resident of one of the Contracting States shall be taxable only in that Contracting State. (3) The term "pensions and other similar remuneration" as used in this Article, means periodic payments made (a) by reason of retirement or death in consideration for services rendered, or (b) by way or compensation for injuries received in connection with past employment. (4) The term "annuities", as used in this Article, means a stated sum paid periodically at stated times during life, or during a specified number of years, under an obligation to make the payments in return for adequate and full consideration (other than services rendered). (5) The term "alimony", as used in this Article, means periodic payments made pursuant to a decree of divorce, separate maintenance agreement, or support or separation agreement which is taxable to the recipient under the internal laws of the Contracting State of which he is a resident.

24【SOCIAL SECURITY PAYMENTS】[1979.10.20]
Social security payments and other public pensions paid by one of the Contracting States to an individual who is a resident of the other Contracting State (or in the case of such payments by Korea, to an individual who is a citizen of the United States) shall be taxable only in the first-mentioned Contracting State. This Article shall not apply to payments described in Article 22 (Governmental Functions).

25【EXEMPTION FROM SOCIAL SECURITY TAXES】[1979.10.20]
(1) The taxes imposed by Chapter 21 of the Internal Revenue Code shall not apply with respect to wages paid for services performed in Guam by a resident of Korea while in Guam on a temporary basis as a non-immigrant alien admitted to Guam pursuant to section 101 (a) (15) (H) (ii) of the United States Immigration and Nationality Act (8 U. S C. 1101(a) (15) (H) (ii)). (2) The exemption provided in paragraph (1) shall continue only so long as the similar exemption provided by section 3121 (b) (18) of the Internal Revenue Code.

26【DIPLOMATIC AND CONSULAR OFFICERS】[1979.10.20]
Nothing in this Convention shall affect the fiscal privileges of diplomatic and consular officials under the general rules of international law or under the provisions of special agreements.

27【】[1979.10.20]
(1) Where a resident of one of the Contracting States considers that the action of one or both of the Contracting States results or will result for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the national laws of the Contracting States, present his case to the competent authority of the Contracting State of which he is a resident. Should the resident's claim be considered to have merit by the competent authority of the Contracting State to which the claim is made, it shall endeavor to come to an agreement with the competent authority of the other Contracting State with a view to avoiding taxation contrary to the provisions of this Convention. (2) The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulties or doubts arising as to the application of this Convention. In particular, the competent authorities of the Contracting States may agree : (a) To the same attribution of industrial or commercial profits to a resident of one of the Contracting States and its permanent establishment situated in the other Contracting State; (b) To the same allocation of income, deductions, credits, or allowances between a person subject to the taxing jurisdiction of one of the Contracting States and any related person; (c) To the same determination of the source of particular items of income ; (d) To the uniform accounting for income and deductions; or (e) To the same meaning of any term used in this Convention. (3) The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of this Article. When it seems advisable for the purpose of reaching agreement, the competent authorities may meet together for an oral exchange of opinions. (4) In the event that the competent authorities reach such an agreement, taxes shall be imposed on such income, and refund r credit of taxes shall be allowed, by the Contracting States in accordance with such agreement.

28【EXCHANGE OF INFORMATION】[1979.10.20]
under the laws and administrative practices of each Contracting State with respect to its own taxes. (2) Any information so exchanged shall be treated as secret, except that such information may be : (a) Disclosed to any person concerned with; or (b) Made part of a public record with respect to, the assessment, collection, or enforcement of, or litigation with respect to, the taxes to which this Convention applies ; (3) No information shall be exchanged which would be contrary to public policy. (4) If specifically requested by the competent authority of one of the Contracting States, the competent authority of the other Contracting State shall provide information under this Article in the form of depositions of witnesses and copies of unedited original documents(including books, papers, statements, records, accounts, or writings), to the same extent such depositions and documents can be obtained under the laws and administrative practices of each Contracting State with respect to its own taxes. (5) The exchange of information shall be either on a routine basis or on request with reference to particular cases. The competent authorities of the Contracting States may agree on the list of information which shall be furnished on a routine basis. (6) The competent authorities of the Contracting States shall notify each other of any amendments of the tax laws referred to in paragraph (1) of Article 1 (Taxes Covered) and of the adoption of any taxes referred to in paragraph (2) of Article 1 (Taxes Covered) by transmitting the texts of any amendments or new statutes at least once a year. (7) The competent authorities of the Contracting States shall notify each other of the publication by their respective Contracting States of any material concerning the application of this Convention, whether in the form of regulations, rulings, or judicial decisions by transmitting the texts of any such materials at least once a year.

29【EXTENSION TO TERRITORIES】[1979.10.20]
(1) Either one of the Contracting States may, at any time while this Convention continues in force, by a written notification given to the other Contracting State through diplomatic channels, declare its desire that the operation of this Convention, either in whole or in part or with such modifications as may be found necessary for special application in a particular case, shall extend to all or any of the areas (to which this Convention is not otherwise applicable) for whose international relations it is responsible and which impose taxes substantially similar in character to those which are the subject of this Convention. When the other Contracting State has, by a written communication through diplomatic channels, signified to the first-mentioned Contracting State that such notification is accepted in respect of such area or areas, and the notification and communication have been ratified and instruments of ratification exchanged, this Convention, in whole or in part, or with such modifications as may be found necessary for special application in a particular case, as specified in the notification, shall apply to the area or areas named in the notification and shall enter into force and effect on and after the date or dates specified therein. None of the provisions of this Convention shall apply to any such area in the absence of such acceptance and exchange of instruments of ratification in respect of that area. (2) At any time after the date of entry into force of an extension under paragraph (1), either of the Contracting States may, by 6 months prior notice of termination given to the other Contracting State through diplomatic channels, terminate the application of this Convention to any area to which it has been extended under paragraph (1), and in such event this Convention shall cease to apply and have force and effect, beginning on or after the first day of January next following the expiration of the 6-month period, to the area or areas named therein, but without affecting its continued application to Korea, the United States, or to any other area to which it has been extended under paragraph (1). (3) In the application of this Convention, in relation to any area to which it is extended by notification by Korea or the United States, reference to "Korea" or the "United States", as the case may be, shall be construed as referring to that area. (4) The termination in respect of Korea or the United States of this Convention under Article 32 (Termination) shall, unless otherwise expressly agreed by both Contracting States, terminate the application of this Convention to any area to which the Convention has been extended under this Article by Korea or the United States.

30【ASSISTANCE IN COLLECTION】[1979.10.20]
(1) Each of the Contracting States shall endeavor to collect on behalf of the other Contracting State such taxes imposed by the other Contracting State as will ensure that any exemption or reduced rate of tax granted under this Convention by that other Contracting State shall not be enjoyed by persons not entitled to such benefits. (2) In no case shall this Article be construed so as to impose upon one of the Contracting States the obligation to carry out measures at variance with the laws, administrative practices, or public policy of either Contracting State with respect to the collection of its own taxes.

31【ENTRY INTO FORCE】[1979.10.20]
This Convention shall be ratified and instruments of ratification shall be exchanged at Washington as soon as possible. It shall enter into force on the thirtieth day following the exchange of instruments of ratification and shall then have effect for the first time: (a) As respects the rate of withholding taxes and Article 25(Exemption from Social Security Taxes), to amounts paid on or after the first day of the second month following the date on which this Convention enters into force ; (b) As respects other taxes, to taxable years beginning on or after January 1 of the year following the date on which this Convention enters into force.

32【TERMINATION】[1979.10.20]
This Convention shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate the Convention at any time after 5 years from the date on which this Convention enters into force provided that at least 6 months' prior notice of termination has been given through diplomatic channels. In such event, the Convection shall cease to have force and effect as respects income of taxable years beginning (or, in the case of withholding taxes and social security taxes, payments made) on or after January 1 next following the expiration of the 6-month period. Done at Seoul in duplicate in the Korean and English languages this 4th day of June, 1976. FOR THE REPUBLIC OF KOREA FOR THE UNITED STATES OF AMERICA
안각서(1979.10.20)【】[1979.10.20]
EXCHANGE OF NOTES(THE UNITED STATES OF AMERICA)

DONE at SEOUL in duplicate in the Korean and English languages this 4th day of June 1976.

FOR THE REPUBLIC OF KOREA
Sgd./
Park Tong-Jin
FOR THE UNITED STATES OF AMERICA
Sgd./
Richard L. Sneider

U.S. Proposing Note
Seoul, June 4, 1976

His Excellency
Park Tong-Jin,
Minister of Foreign Affairs
Seoul

Excellency:
I have the honor to refer to the Income Tax Convention signed between the Governments of Korea and the United States. During the course of the negotiations leading up to the signed Convention, the Korean representatives (A) stressed the need for increased provisions in the Convention that would constitute special incentives to promote the flow of United States capital and technology to Korea and (B) stated that the Convention applies to the Korean Defense Tax imposed in connection with the taxes referred to in Al-tide 1 (1) of the Convention.
The United States delegation was unable to agree to provisions for special investment incentives, but I want to assure you that my Government recognizes the importance which your Government places on increased investment in Korea. Accordingly, when circumstances permit, my Government will be prepared to resume discussions with a view to incorporating provisions into this Convention that will minimize the interference of the United States tax system with incentives offered by the Government of the Republic of Korea and that will be consistent with the income tax policies of the United states Government regarding other developing countries.
I should appreciate your confirmation that the government of the Republic of Korea interprets the words "Korean Tax" in Article 1 (1). as including the Korean Defense Tax assessed on the taxes referred to therein.
Accept, Excellency, the renewed assurances of my highest consideration.

Richard L. Sneider

Korea Note In Reply
June 4, 1976

His Excellency
Richard L. Sneider
Ambassador Extraordinary and
Plenipotentiary of the
United States of America to
the Republic of Korea

Excellency:
I have the honor to acknowledge the receipt of your Excellency's Note dated June 4, 1976 with regard to increased investment of the United States in Korea and with regard to the application of the Tax Convention to the Korean Defense Tax imposed in connection with the taxes referred to in Article 1 (1) of the Convention.
I have further the honor to note that the United States will be prepared, when circumstances permit, to resume discussions with a view to incorporating provisions into the Convention that will minimize the interference of the U.S tax system with incentives offered by the Government of Korea and that will be consistent with the income tax policies of the United States Government regarding other developing countries.
I have also the honor to confirm that the definition of Korean Tax in Article 1 (1). of the Tax Convention includes the Korean Defense Tax assessed on the taxes referred to therein.
Accept, Excellency, the renewed assurances of my highest consideration.

Park Tong-Jin
Ministry of Foreign Affairs
Technical Explanation【】[1979.10.20]
TECHNICAL EXPLANATION OF THE CONVENTION BETWEEN THE UNITED STATES OF AMERICA AND THE REPUBLIC OF KOREA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND THE ENCOURAGEMENT OF INTERNATIONAL TRADE AND
INVESTMENT, SIGNED AT SEOUL ON JUNE 4, 1976

GENERAL EFFECTIVE DATE UNDER ARTICLE 31: 1 JANUARY 1980

It is the practice of the Treasury Department to prepare for the use of the Senate and other
interested persons a Technical Explanation of the tax conventions which are submitted to the
Senate for its advice and consent to ratification.

An Income Tax Convention with Korea was signed June 4, 1976, and submitted by the
President to the Senate on September 3, 1976. On July 19 and 20, 1977 and on June 6, 1979, the
Senate Committee on Foreign Relations held hearings and this Technical Explanation was
presented. The Senate voted its advice and consent on July 9, 1979, and instruments of
ratification were exchanged on September 20, 1979.

TABLE OF ARTICLES

Article 1-------------Taxes Covered
Article 2 ------------General Definitions
Article 3 ------------Fiscal Domicile
Article 4 ------------General Rules of Taxation
Article 5 ------------Relief from Double Taxation
Article 6 ------------Source of Income
Article 7 ------------Nondiscrimination
Article 8 ------------Business Profits
Article 9 ------------Permanent Establishment
Article 10 -----------Shipping and Air Transport
Article 11 -----------Related Persons
Article 12 -----------Dividends
Article 13 -----------Interest
Article 14 -----------Royalties
Article 15 -----------Income from Real Property
Article 16 -----------Capital Gains
Article 17 -----------Investment or Holding Companies
Article 18 -----------Independent Personal Services
Article 19 -----------Dependent Personal Services
Article 20 -----------Teachers
Article 21 -----------Students and Trainees
Article 22 -----------Governmental Functions
Article 23 -----------Private Pensions and Annuities
Article 24 -----------Social Security Payments
Article 25 -----------Exemption from Social Security Taxes
Article 26 -----------Diplomatic and Consular Officers
Article 27 -----------Mutual Agreement Procedure
Article 28 -----------Exchange of Information
Article 29 -----------Extension to Territories
Article 30 -----------Assistance in Collection
Article 31 -----------Entry into Force
Article 32 -----------Termination
Exchange of Notes-----of 4 June, 1976

                     ARTICLE 1
                  Taxes Covered

Paragraph (1) designates the taxes of the Contracting States which are the subject of the
Convention. In the case of the United States, the subject taxes are the Federal income taxes
imposed by the Internal Revenue Code ("Code") (referred to as "United States tax"). However, in
certain situations described in paragraph (8) of Article 4 (General Rules of Taxation), the United
States reserves its right to impose taxes under Sections 531 (accumulated earnings tax) and 541
(personal holding company tax), except as provided in such paragraph (8).

In the case of Korea, paragraph (1) provides that the subject taxes are the income tax and
the corporation tax (referred to as "the Korean tax"). In an exchange of notes, Korea has agreed
that the term "Korean tax" also includes the Korean Defense tax assessed on the taxes referred to
in paragraph (1).

Pursuant to paragraph (2), the Convention will also apply to taxes substantially similar to
those covered by paragraph (1) which are imposed in addition to, or in place of, existing taxes,
after June 4, 1976 (the date of signature of the Convention).

Under paragraph (3), for the purpose of Article 7 (Nondiscrimination), the Convention
will apply to taxes of every kind imposed at the national, state, or local level; and for purposes of
Article 28 (Exchange of Information), the Convention will apply to taxes of every kind imposed
at the national level.

                     ARTICLE 2
                General Definitions

Paragraph (1) sets out definitions of certain basic terms used in the Convention. A
number of important terms, however, are defined elsewhere in the Convention.

The term "United States" means the United States of America. When used in a
geographical sense, the term means the states of the United States and the District of Columbia.
Thus, the Convention does not apply to possessions of the United States or the Commonwealth
of Puerto Rico. The term "Korea" means the Republic of Korea.

When used in a geographical sense, the term "Korea" means all territory in which the laws relating to Korean tax are in force, and the terms "United States" and "Korea" also include
their respective territorial seas and, in general accord with the principles of section 638 of the
Code, their continental shelves.

The term "Contracting State" means the United States or Korea as the context requires.

The term "person" includes an individual, a partnership, a corporation, an estate, a trust or
any body of persons.

The term "United States corporation" or "corporation of the United States" is defined as a
corporation which is created or organized under the laws of the United States, any state thereof,
or the District of Columbia, or any unincorporated entity treated as a United States corporation
for United States tax purposes. A "Korean corporation" or "corporation of Korea" is defined as a
corporation (other than a United States corporation) which has its head or main office in Korea,
or any entity treated as a Korean corporation for Korean tax purposes.

With respect to the United States, the term "competent authority" means the Secretary of
the Treasury or his delegate. With respect to Korea, it means the Minister of Finance or his
delegate.

The term "State" means the United States, Korea or any other National State.

The term "citizen", in the case of the United States, is defined as a citizen of the United
States, and in the case of Korea, the term is defined as a national of Korea.

Paragraph (2) provides that any term used in the Convention which is not defined therein
shall, unless the context otherwise requires, have the meaning which it has under the laws of the
Contracting State whose tax is being determined. However, where a term has a different meaning
under the laws of Korea and the United States or where the meaning under the laws of one of the
Contracting States is not readily determinable, the competent authorities may for purposes of the
Convention establish a common meaning in order to prevent double taxation or to further any
other purpose of the Convention.

                     ARTICLE 3
                  Fiscal Domicile

This Article sets forth rules for determining the residence of individuals, corporations,
and other persons for purposes of the Convention. Residence is important because, in general,
only a resident of one of the Contracting States may qualify for the benefits of the Convention.

In paragraph (1), the term "resident of Korea" is defined as a Korean corporation (as
defined in Article 2 (General Definitions)) and any person (except a corporation or any entity
treated under Korean law as a corporation) resident in Korea for purposes of its tax. Similarly,
"resident of the United States" means a United States corporation (as defined in Article 2
(General Definitions)) and any person (except a corporation or any unincorporated entity treated
as a corporation for United States tax purposes) resident in the United States for purposes of its
tax. Thus, a resident of the United States includes a resident alien individual and a resident
citizen but under no circumstances a foreign corporation. A citizen of the United States or Korea
is not automatically a resident of the United States or Korea for purposes of this Convention.

The Convention provides that a person acting as a partner or fiduciary is considered a
resident of a Contracting State only to the extent that the income derived by such person is
subject to tax in such Contracting State as the income of a resident. For example, under United
States law, a partnership is never, and an estate or trust is often not, taxed as such. Under the
Convention, income received by a partnership, estate, or trust will not be treated for purposes of
the Convention as income received by a resident of the United States unless such income is
subject to tax in the United States as the income of a resident. Thus, the treatment of income
received by a partnership will be determined by the residence and taxation of its partners for
United States tax purposes with respect to that income. To the extent the partners are subject to
United States tax as residents of the United States, the partnership will be treated as a resident of
the United States. Similarly, the treatment of income received by a trust or estate will be
determined by the residence and taxation of the person subject to tax on such income, which may
be the grantor, the beneficiaries or the trust or estate itself, as the case may be.

Paragraph (1) also provides that in determining the residence of a partnership which
makes a payment, that partnership shall be considered a resident of the State under the laws of
which it was created or organized. This paragraph is to be used in the determination of the source
of interest. Thus, if a partnership organized in the United States pays interest to a resident of
Korea, the source of the interest would be the United States even if none of the partners are
residents of the United States.

Under paragraph (2), an individual who is a resident of both Contracting States under
paragraph (1) will, for purposes of the Convention, be deemed to be a resident of the Contracting
State in which he has his permanent home (where an individual dwells with his family), his
center of vital interests (closest economic and personal relations), a habitual abode, or his
citizenship, in the order listed. If the issue is not settled by these tests, the competent authorities
will decide by mutual agreement the one Contracting State of which he will be considered to be a
resident.
Since the definitions of residence in this Article apply for purposes of the entire
Convention, an individual who is deemed to be a resident of one Contracting State and not a
resident of the other Contracting State by reason of paragraph (2) will be deemed to be a resident
only of the first-mentioned Contracting State for all purposes of the Convention, including
Article 4 (General Rules of Taxation). For example, if an individual is determined to be a
resident of Korea under paragraph (2) and is also considered to be a resident of the United States
under the laws of the United States, such individual would continue to receive the exemptions
and special benefits granted by the Convention to residents of Korea, unless the individual is a
citizen of the United States (see the saving clause of paragraph (4) of Article 4 (General Rules of
Taxation)).

                     ARTICLE 4
             General Rules of Taxation

Under paragraph (1), a resident of one Contracting State may be taxed by the other
Contracting State on any income from sources within that other Contracting State and only on
such income, subject to any limitations set forth in the Convention. For this purpose, the source
rules contained in Article 6 (Source of Income) are to be applied. However, if the resident is a
citizen of the other Contracting State, that other Contracting State may tax the resident without
regard to this paragraph because of the saving clause of paragraph (4) of this Article.

Paragraph (2) contains the customary rule that the Convention will not restrict in any
manner any exclusion, exemption, deduction, credit, or other allowance now or hereafter
accorded by the laws of a Contracting State in the determination of a tax imposed by it, or by any
other agreement between the Contracting States. This rule reflects the principle that a convention
should not increase the tax burden on residents of the Contracting States.

Paragraph (3) provides that the provisions of the Convention shall not affect Korean law
so as to deny benefits accorded residents of the United States under the provision of the Korean
Foreign Capital Inducement Law No. 2598 of March 12, 1973 as amended or any similar law to
encourage investment in Korea. This paragraph applies only with respect to Korean law, and has
no impact on United States tax on the Korean source income which may benefit from such
provisions.

Paragraph (4) contains the traditional saving clause under which the United States
reserves the right to tax its citizens and residents (as determined under Article 3 (Fiscal
Domicile)) as if the Convention had not come into effect. However, under paragraph (5), the
saving clause does not apply in several cases in which its application would contravene policies
reflected in the Convention. Thus, the saving clause does not affect the provisions with respect to
relief from double taxation, nondiscrimination, social security payments, or the mutual
agreement procedure. Moreover, the saving clause does not affect the benefits of the Convention
to teachers, students and trainees, and individuals performing governmental functions, who are
neither citizens of, nor have immigrant status in, the Contracting State imposing the tax. In the
case of the United States, "immigrant status" means the individual has been admitted to the
United States for permanent residence. The saving clause is reciprocal.

Paragraph (6) authorizes the competent authorities of the Contracting States to prescribe
regulations necessary to carry out the provisions of the Convention. On the United States side,
this authority is also provided by section 7805 of the Code.

Paragraph (7) allows, for purposes of United States tax, in the case of a resident of Korea
who is not a resident of the United States, a deduction for personal exemption (subject to the
conditions prescribed in sections 151 through 154 of the Code as in effect on June 4, 1976) for
the spouse of the taxpayer and for each child of the taxpayer present in the United States and
residing with him in the United States at any time during the taxable year. These additional
deductions shall not exceed that proportion of the taxpayer's entire income from all sources, for
any taxable year, which is from sources within the United States and which is treated as
effectively connected with the conduct of a trade or business within the United States within the
meaning of section 864(c). These additional deductions are to continue as long as section 873 of
the United States Internal Revenue Code provides only one personal exemption for a taxpayer
who is a resident of Korea and not a resident of the United States.

Paragraph (8) reserves the right of the United States to impose its personal holding
company tax (section 541 of the Code) and its accumulated earnings tax (section 531 of the
Code) notwithstanding any provision of the Convention. However, paragraph (8) also provides
that a Korean corporation will be exempt from the personal holding company tax in any taxable
year if all of its stock is owned, directly or indirectly, by one or more individuals who are
residents of Korea (and not citizens of the United States) for that entire year. In addition, a
Korean corporation will be exempt from the accumulated earnings tax in any taxable year unless
it is engaged in trade or business in the United States through a permanent establishment at any
time during such year. Even if a Korean corporation is engaged in trade or business in the United
States through a permanent establishment at any time during the taxable year it may be subjected
to the accumulated earnings tax only with respect to any income derived from sources within the
United States. See Regulation section l.532-1 (c).

                     ARTICLE 5
           Relief from Double Taxation

Under paragraph (1), the United States agrees to allow a United States citizen or resident
as a credit against the United States tax the appropriate amount of Korean tax in accordance with
the provisions and subject to the limitations of the law of the United States (as it may be
amended from time to time without changing the principles of paragraph (1)). In addition, in the
case of a United States corporation owning at least ten percent of the voting power i.e., voting
stock) of a Korean corporation from which it receives dividends in any taxable year, the United
States will allow credit for the appropriate amount of Korean tax paid by the Korean corporation
paying such dividends with respect to the profits out of which such dividends are paid. The
appropriate amount will be based upon the amount of tax paid to Korea, but the credit shall not
exceed the limitations (for the purpose of limiting the credit to the United States tax on income
from sources within Korea or on income from sources outside of the United States) provided by
United States law for the taxable year. This provision does not require the United States to
maintain a per-country or overall limitation in the future so long as the general principle of a
foreign tax credit remains in effect. For the purpose of applying the United States credit in
relation to taxes paid to Korea, the rules set forth in Article 6 (Source of Income) will be applied
to determine the source of income.

Paragraph (2) contains a reciprocal provision under which, in accordance with the
provisions and subject to the limitations of Korean law (as it may be amended without changing
the general principles of the Treaty Article), Korea will allow to its citizens and residents a credit
against Korean tax for the appropriate amount of income taxes paid to the United States.
Furthermore, in the case of a Korean corporation owning at least ten percent of the voting power
of a United States corporation from which it receives dividends in a taxable year, Korea shall
allow a credit for the appropriate amount of taxes paid to the United States by the United States
corporation paying the dividends with respect to the profits out of which such dividends are paid.
The appropriate amount will be based on the amount of tax paid to the United States, but the
credit may not exceed that portion of Korean tax which such citizen's or resident's net income
from sources within the United States bears to his entire net income for the same taxable year.
For the purpose of applying the Korean credit in relation to taxes paid to the United States, the
rules set forth in Article 6 (Source of Income) shall be applied to determine the source of the
income.

                     ARTICLE 6
                Source of Income

This Article contains the source rules which are to be used in applying the provisions of
the Convention, such as Article 5 (Relief from Double Taxation). Under Article 4 (General Rules
of Taxation), one Contracting State may tax a resident of the other Contracting State only on
income from sources within the first-mentioned Contracting State (provided the resident is not a
citizen of the first-mentioned Contracting State).

Paragraph (1) provides that dividends will be treated as income from sources within a
Contracting State only if paid by a corporation of that Contracting State.

Under paragraph (2), with two exceptions, interest will be treated as income from sources
within a Contracting State only if paid by that Contracting State, a political subdivision or a local
authority thereof, or by a resident of that Contracting State. Under the first exception, if the
person paying the interest (whether or not such person is a resident of a Contracting State) has a
permanent establishment in a Contracting State in connection with which the indebtedness on
which the interest is paid was incurred and such interest is borne by the permanent establishment,
the interest will be deemed from sources within the Contracting State in which the permanent
establishment is situated. For example, if a resident of France has a permanent establishment in
Korea which borrows money from a resident of the United States and bears the interest, the
interest will be deemed to be from Korean sources. Thus, if the limitation in paragraph (2) of
Article 13 (Interest) is applicable, this interest will be taxed in Korea at the reduced rate. As
provided in paragraph (8) of Article 9 (Permanent Establishment), the principles of Article 9 will
be applied to determine whether the resident of France has a permanent establishment in Korea.

Under the second exception, paragraph (2) also provides that if the person paying the
interest is a resident of a Contracting State and has a permanent establishment in a State other
than a Contracting State in connection with which the indebtedness on which the interest is paid
was incurred and such interest is paid to a resident of the other Contracting State, and such
interest is borne by the permanent establishment, the interest will be deemed from sources within
the State in which the permanent establishment is situated. This interest will be exempt from tax
in the Contracting State where the payor is a resident if paid to a resident of the other Contracting
State because, under Article 4 (General Rules of Taxation), a resident of one Contracting State,
not a citizen of the other Contracting State, may be taxed by that other Contracting State only on
income from sources within that other Contracting State.

Paragraph (3) provides that royalties described in paragraph (4) of Article 14 (Royalties)
for the use of, or the right to use, property or rights other than as provided in paragraph (5) with
respect to ships or aircraft, described in such paragraph will be treated as income from sources
within a Contracting State only to the extent that such royalties are for the use of, or the right to
use, such property or rights within that Contracting State.

Paragraph (4) provides that income from real property and royalties from the operation of
mines, quarries, or other natural resources (including gains derived from the sale of such
property or the right giving rise to such royalties) will be treated as income from sources within a
Contracting State only if such property is situated in that Contracting State.

Paragraph (5) provides that income from the rental of tangible personal (movable)
property will be treated as income from sources within a Contracting State only if such property
is situated in that Contracting State. Income from the rental of ships or aircraft derived by a
person not engaged in the operation of ships or aircraft in international traffic shall be treated as
income from sources within a Contracting State only if the lessee is a resident of that Contracting
State.
Under paragraph (6), income received by an individual for his performance of labor or
personal services, whether as an employee or in an independent capacity, or for furnishing the
personal services of another person and income received by a corporation for furnishing the
personal services of its employees or others, will be treated as income from sources within a
Contracting State only to the extent that such services are performed in that Contracting State.
Income from personal services performed aboard ships or aircraft operated by a resident of a
Contracting State in international traffic will be treated as income from sources within that
Contracting State if rendered by a member of the regular complement of the ship or aircraft. For
purposes of this paragraph, income from labor or personal services includes pensions (as defined
in paragraph (3) of Article 23 (Private Pensions and Annuities)) paid in respect of such services.
However, remuneration described in Article 22 (Governmental Functions) and payments
described in Article 24 (Social Security Payments) will be treated as income from sources within
the Contracting State only if paid by or from the public funds of that Contracting State or local
authority thereof.

Paragraph (7) provides that income from the purchase and sale of intangible or tangible
personal (including movable) property (other than gains defined as royalties by paragraph (4) (b)
of Article 14 (Royalties) ) will be treated as income from sources within a Contracting State only
if such property is sold in that Contracting State.

Paragraph (8) contains a general qualification to the preceding source rules. It provides
that industrial or commercial profits attributable to a permanent establishment which the
recipient, a resident of one Contracting State, has in the other Contracting State will be treated as
income from sources within that other Contracting State. Industrial or commercial profits
attributable to such permanent establishment may include any item of income described in
paragraphs (1) through (6) if the item of income is "effectively connected" with the permanent
establishment. See the discussion of paragraph (6) (b) of Article 8 (Business Profits) for a
discussion of the effectively connected concept.

Under paragraph (9) the source of any item of income to which paragraphs (1) through
(8) are not applicable will be determined by each Contracting State in accordance with its own
law. However, if the source of any item of income under the laws of one Contracting State is
different from its source under the laws of the other Contracting State or if its source is not
readily determinable under the laws of one of the Contracting States, the competent authorities of
the Contracting States may, in order to prevent double taxation or further any other purpose of
the Convention, establish a common source of the item of income for purposes of the
Convention.

Several of the source rules set out in this Article differ to some degree from those existing
in the Code. Since Article 4 (General Rules of Taxation) provides that the Convention will not
increase a person's United States tax, a taxpayer is not required to apply the Convention rules in
calculating his United States tax liability.

                     ARTICLE 7
                 Nondiscrimination

Paragraph (1) provides that a citizen of one Contracting State who is a resident of the
other Contracting State will not be subjected in that other Contracting State to more burdensome
taxes than a citizen of that other Contracting State who is a resident thereof. The determination
whether there is more burdensome taxation is to be made by comparing the treatment of
individuals who are in comparable positions. Thus, for example, a citizen of Korea who is a
resident of the United States and who otherwise meets the requirements specified in section 911
of the Code would under this Article be eligible for the benefits of section 911 even though not a
citizen of the United States. On the other hand, just as a United States citizen who becomes a
nonresident alien at any time during a taxable year or whose spouse is a nonresident alien at any
time during a taxable year cannot file a joint return for that year, a Korean citizen would not be
entitled to file a joint return with his spouse if either is a nonresident alien at any time during the
taxable year.

Paragraph (2) provides that a permanent establishment which a resident of one
Contracting State has in the other Contracting State will not be subject in that other Contracting
State to more burdensome taxes than a resident of that other Contracting State carrying on the
same activities. However, this does not obligate a Contracting State to grant to individual
residents of the other Contracting State any personal allowance, reliefs, or deductions for
taxation purposes on account of civil status or family responsibilities which it grants to its own
individual residents.

Paragraph (3) prohibits one Contracting State from subjecting a corporation of such
Contracting State, the capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State to any taxation or any
requirement connected with taxation which is other or more burdensome than those applicable to
corporations of the first-mentioned Contracting State carrying on the same activities, the capital
of which is wholly or partly owned or controlled by one or more residents of the first-mentioned
Contracting State.

Under paragraph (3) of Article 1 (Taxes Covered), the provisions of this Article extend to
taxes of every kind imposed at the National, state or local level.

                     ARTICLE 8
                  Business Profits

Paragraph (1) sets forth the general rule that industrial or commercial profits of a resident
of one Contracting State are exempt from tax by the other Contracting State unless the resident is
engaged in industrial or commercial activity in that other Contracting State through a permanent
establishment situated therein. Where the resident is so engaged, only the industrial or
commercial profits attributable to the permanent establishment can be taxed by that other
Contracting State, unless the resident is a citizen of the other Contracting State. (See the saving
clause in paragraph (4) of Article 4 (General Rules of Taxation).) Under paragraph (8) of Article
6 (Source of Income), industrial or commercial profits whether from sources within or without a
Contracting State attributable to a permanent establishment which a resident of one Contracting
State has in the other Contracting State will be considered to be from sources within the other
Contracting State. Thus, items of income described in section 864(c)(4)(B) of the Code
attributable to a permanent establishment situated in the United States will be subject to tax by
the United States.

In determining the proper attribution of industrial or commercial profits under the
Convention, paragraph (2) provides that both Contracting States will attribute to the permanent
establishment such profits which would be attributable to it if it were an independent entity
engaged in the same or similar activities under the same or similar conditions and dealing wholly
independently with the resident of which it is a permanent establishment. Under paragraph (3),
expenses which are reasonably connected with profits attributable to the permanent
establishment, including executive and general administrative expenses, whether incurred in the
Contracting State in which the permanent establishment is situated or elsewhere, will be allowed
as deductions in determining the industrial or commercial profits of the permanent establishment.
However, in determining the amount of the deduction under paragraph (3) for expenses incurred
by the head office, the deduction generally will be limited to the expense incurred without
including a profit element for the head office.

Paragraph (4) provides that no profits shall be attributed to a permanent establishment
merely because of the purchase of goods or merchandise by that permanent establishment, or by
the resident of which it is a permanent establishment, for the account of such resident. Paragraph
(2) of the Article does not override paragraph (4). Thus, where a permanent establishment
purchases goods for its head office, the industrial or commercial profits attributed under
paragraph (2) or to the permanent establishment with respect to its other activities will not be
increased by adding a notional figure for profits from purchasing.

Under paragraph (5) the term "industrial or commercial activity" includes the conduct of
manufacturing, mercantile, insurance, banking, financing, agricultural, fishing or mining
activities, the operation of ships or aircraft, the furnishing of services, and the rental of tangible
personal property (including ships or aircraft when the rental is not covered by Article 10). The
term does not include the performance of personal services by an individual either as an
employee or in an independent capacity.

Paragraph (6)(a) defines the term "industrial or commercial profits" to include income
derived from industrial or commercial activity, and income derived from real property and
natural resources and dividends, interest, royalties (as defined in paragraph (4) of Article 14
(Royalties)), and capital gains but only if the property or rights giving rise to such income,
dividends, interest, royalties, or capital gains is effectively connected with a permanent
establishment which the recipient, being a resident of one Contracting State, has in the other
Contracting State, whether or not such income is derived from industrial or commercial activity.
See paragraph (3) of Article 12 (Dividends), paragraph (4) of Article 13 (Interest), paragraph (3)
of Article 14 (Royalties), and paragraph (1)(b) of Article 16 (Capital Gains).

Paragraph (6)(b) contains criteria for determining whether property or rights are
effectively connected with a permanent establishment. Factors to be taken into account include
whether the rights or property are used in or held for use in carrying on industrial or commercial
activity through a permanent establishment and whether the activities carried on through such
permanent establishment were a material factor in the realization of the income derived from
such property or rights.

For this purpose, due regard shall be given to whether or not such property or rights or
such income were accounted for through such permanent establishment. The effectively
connected test in this paragraph is substantially similar to the effectively connected test in section
864(c) of the Code.

Under paragraph (7), where industrial or commercial profits include items of income
which are dealt with separately in other articles of the Convention, the provisions of those
articles will, except as otherwise provided therein, supersede the provisions of this Article. Thus,
for example, taxation of interest income will be controlled by Article 13 (Interest) and not by this
Article unless, as provided by paragraph (4) thereof, the interest is effectively connected with a
permanent establishment.

                     ARTICLE 9
           Permanent Establishment

This Article defines the term "permanent establishment." The existence of a permanent
establishment is relevant under Article 8 (Business Profits) to the taxation of industrial or
commercial profits and in determining the applicability of other provisions of the Convention.

Under paragraph (1), the term "permanent establishment" means a fixed place of business
through which industrial or commercial activity is carried on. Illustrations in paragraph (2) of a
fixed place of business include a branch; an office; a factory; a workshop; a warehouse; a store
or other sales outlet; a mine, quarry or other place of extraction of natural resources; and a
building Site or construction or installation project which exists for more than six months. As a
general rule, any fixed facility or premises through which a resident conducts industrial or
commercial activity for an indefinite or substantial period of time will be treated as a fixed place
of business unless it is used only for one or more of the activities described in paragraph (3).

Under the construction or installation project rule the six month period begins only when
work physically commences in the other Contracting State. A series of contracts or projects
which are inter-dependent both commercially and geographically is to be treated as a single
project for the purpose of applying the six month test.

Paragraph (3) specifically provides that a permanent establishment does not include a
fixed place of business used only for one or more of the following:
"(a) The use of facilities for the purpose of storage, display, or delivery of goods
or merchandise belonging to the resident;
"(b) The maintenance of a stock of goods or merchandise belonging to the
resident for the purpose of storage, display, or delivery;
"(c) The maintenance of a stock of goods or merchandise belonging to the
resident for the purpose of processing by another person;
"(d) The maintenance of a fixed place of business for the purpose of purchasing
goods or merchandise, or for collecting information, for the resident;
"(e) The maintenance of a fixed place of business for the purpose of advertising,
for the supply of information, for scientific research, or for similar activities which have a
preparatory or auxiliary character, for the resident; or
"(f) The maintenance of a building site or construction or installation project
which does not exist for more than 6 months."

As noted, these exceptions are cumulative and a fixed place of business used only for one or
more of these purposes will not be considered a permanent establishment under the Convention.

Paragraph (4) provides that even if a resident of one of the Contracting States does not
have a permanent establishment in the other Contracting State, under paragraphs (1) through (3)
of this Article, he shall nevertheless be deemed to have a permanent establishment in the other
Contracting State if he engages in trade or business in that other Contracting State through an
agent who has authority to conclude contracts in the name of that resident and regularly exercises
that authority in that other Contracting State, unless the exercise of the authority is limited to the
purchase of goods or merchandise for the account of the resident, or who maintains in that other
Contracting State a stock of goods or merchandise belonging to that resident from which he
regularly fills orders or makes deliveries.

Under paragraph (5), notwithstanding subparagraphs (a), (c) and (d) of paragraph (3), if a
resident of one of the Contracting States has a fixed place of business in the other Contracting
State and goods or merchandise are either:
(1) subjected to processing in that other Contracting State by another person
(whether or not purchased in that other Contracting State), or
(2) are purchased in that other Contracting State (and such goods or merchandise
are not subjected to processing outside that other Contracting State) then such resident
shall be considered to have a permanent establishment in that other Contracting State, if
all or part of such goods or merchandise is sold by or on behalf of such resident for use,
consumption or disposition in that other Contracting State.

On the other hand, notwithstanding the provisions of paragraphs (4) and (5), paragraph
(6) provides that a resident of one Contracting State will not be deemed to have a permanent
establishment in the other Contracting State merely because such resident engages in industrial
or commercial activity in such other Contracting State through a broker, general commission
agent, or any other agent of an independent status, where such broker or agent is acting in the
ordinary course of his business.

Under paragraph (7), the fact that a resident of one Contracting State is a related person
with respect to a resident of the other Contracting State or with respect to a person who engages
in industrial or commercial activity in that other Contracting State (whether through a permanent
establishment or otherwise) shall not be taken into account in determining whether the resident
of the first-mentioned Contracting State has a permanent establishment in that Contracting State.
As defined in Article 11 (Related Persons), a person is related to another person if either person
owns or controls directly or indirectly the other, or if any third person owns or controls directly
or indirectly both such persons.

Paragraph (8) provides that the principles set forth in this Article are to be applied in
determining whether there is a permanent establishment in a State other than one of the
Contracting States or whether a person other than a resident of one of the Contracting States has
a permanent establishment in one of the Contracting States. This is necessary for the proper
application of paragraph (2) of Article 6 (Source of Income). This paragraph is not intended to
extend the benefits of the Convention to persons other than residents of the two Contracting
States.

                    ARTICLE 10
             Shipping and Air Transport

The Article provides that, notwithstanding Article 8 (Business Profits), income derived
by a resident of one of the Contracting States from the operation in international traffic of ships
or aircraft will be exempt from tax by the other Contracting State. Income derived from the
operation in international traffic of ships or aircraft is defined to include income incidental to
such operation, such as income derived from the use or lease of containers, trailers from the
inland transportation of containers and other related equipment. It does not, however, include
other income from the inland transportation of containers.

This Article is subject to the saving clause of paragraph (4) of Article 4 (General Rules of
Taxation). Therefore, a Contracting State may tax the income from international traffic derived
by a resident of the other Contracting State without regard to this Article if such resident is a
citizen of the first-mentioned Contracting State.

                      ARTICLE 11
                   Related Persons

This Article complements section 482 of the Code and confirms the authority of the
United States under that section. Where a person subject to the taxing jurisdiction of one of the
Contracting States and any other person are related and where such related persons make
arrangements or impose conditions between themselves which are different from those which
would be made between independent persons, under paragraph (1) any income, deductions,
credits or allowances which would, but for those arrangements or conditions, have been taken
into account in computing the income or loss of, or the tax payable by, one of such persons, may
be taken into account in computing the amount of the income subject to tax and the taxes payable
by such person.

It is anticipated that if an adjustment is made in accordance with paragraph (1) by a
Contracting State to the income of one of its residents, the other Contracting State will, if it
agrees with such redetermination and if necessary to prevent double taxation, make a
corresponding adjustment to the income of a person in such other Contracting State related to
such resident. If the other Contracting State disagrees with the redetermination, it is intended that
the two Contracting States will endeavor to reach agreement in accordance with the mutual
agreement procedure in Article 27 (Mutual Agreement Procedure).

Paragraph (2) provides that for purposes of the Convention a person is related to another
person if either person owns or controls directly or indirectly the other, or if a third person or
persons own or control directly or indirectly both. "Control" includes any kind of control,
whether or not legally enforceable, and however exercised or exercisable.

                   ARTICLE 12
                     Dividends

Paragraph (1) provides that dividends derived from sources within one Contracting State
by a resident of the other Contracting State may be taxed by both Contracting States. However,
paragraph (2) limits the rate of tax imposed by the Contracting State of source to a rate not in
excess of fifteen percent of the gross amount of the dividend. If the dividend recipient is a
corporation, the rate of tax imposed by the Contracting State of source may not exceed ten
percent of the gross amount of the dividend if during the part of the paying corporation's taxable
year which precedes the date of payment of the dividend and during the whole of its prior taxable
year (if any), at least ten percent of the outstanding shares of the voting stock of the paying
corporation was owned by the recipient corporation, and not more than twenty-five percent of
the gross income of the paying corporation for such prior taxable year (if any) consists of interest
or dividends (other than interest derived from the conduct of a banking, insurance, or financing
business and dividends or interest received from subsidiary corporations, fifty percent or more of
the outstanding shares of the voting stock of which is owned by the paying corporation at the
time such dividends or interest is received). These rate limitations do not affect the taxation of
profits of the corporation which pays the dividends.

Paragraph (3) provides that the limitations of paragraph (2) will not apply if the dividend
recipient, being a resident of one Contracting State, has a permanent establishment in the other
Contracting State and the shares with respect to which the dividends are paid are effectively
connected with the permanent establishment. In such a case, the dividend will be treated as
industrial or commercial profits subject to Article 8 (Business Profits). If the dividend recipient
is a citizen of the source Contracting State, that Contracting State may tax the recipient without
regard to this Article because of the saving clause of paragraph (4) of Article 4 (General Rules of
Taxation).

                    ARTICLE 13
                       Interest

Paragraph (1) provides that interest derived from sources within one Contracting State by
a resident of the other Contracting State may be taxed by both Contracting States.

Paragraph (2) provides that the rate of tax imposed by one of the Contracting States on
interest derived from sources within that State by a resident of the other Contracting State shall
not exceed 12 percent of the gross amount of the interest.

Paragraph (3) provides that, notwithstanding paragraphs (1) and (2), interest derived from
sources within one of the Contracting States shall be exempt from tax by that Contracting State if
it is beneficially derived by the Government of the other Contracting State, by any local authority
thereof, the central bank of that other Contracting State, or any instrumentality wholly owned by
that Government or that central bank or both, not subject to tax by that other Contracting State on
its income. In the case of the United States, examples of "instrumentalities" wholly owned by the
government are the Export-Import Bank and the Overseas Private Investment Corporation. The
"central bank" in the case of Korea would be the Bank of Korea, and in the case of the United
States, the Federal Reserve Banks.

Paragraph (4) provides that paragraph (2) will not apply if the interest recipient, being a
resident of one Contracting State, has a permanent establishment in the other Contracting State
and the indebtedness giving rise to the interest is effectively connected with the permanent
establishment. In such a case, the interest will be treated as industrial or commercial profits
subject to Article 8 (Business Profits).

If excessive interest is paid to a related person, paragraph (5) provides that the provisions
of the Article do not apply to the excessive portion of the payment. The excessive portion may be
taxed by each Contracting State according to its own law, including the provisions of the
Convention where applicable. In the case of the United States, the excessive portion may be
taxed as a dividend, in which case the provisions of Article 12 (Dividends) will apply.

Paragraph (6) defines the term "interest" for purposes of the Convention as income from
bonds, debentures, Government securities, notes, or other evidences of indebtedness, whether or
not secured and whether or not carrying a right to participate in profits, and debt-claims of every
kind, as well as all other income which, under the taxation law of the Contracting State in which
the income has its source, is assimilated to income from money lent.

This Article is subject to the saving clause of paragraph (4) of Article 4 (General Rules of
Taxation). Therefore, interest derived by a citizen of the source Contracting State may be taxed
by that Contracting State without regard to this Article.

                     ARTICLE 14
                       Royalties

Paragraph (1) provides that tax imposed by one of the Contracting States on royalties
derived from sources within that Contracting State by a resident of the other Contracting State
shall not exceed fifteen percent of the gross amount thereof, except as provided in paragraphs (2)
and (3).

Under paragraph (2) royalties derived from copyrights, or rights to produce or reproduce
any literary, dramatic, musical, or artistic work, by a resident of one Contracting State, as well as
royalties received as consideration for the use of, or the right to use, motion picture films
including films and tapes used for radio or television broadcasting, may not be taxed by the other
Contracting State at a rate of tax which exceeds ten percent of the gross amount of the royalties.

Paragraph (3) provides that paragraphs (1) and (2) will not apply if the royalty recipient,
being a resident of one Contracting State, has in the other Contracting State a permanent
establishment and the property or rights giving rise to the royalty is effectively connected with
such permanent establishment. In such a case, the royalty will be treated as industrial or
commercial profits subject to Article 8 (Business Profits).

Paragraph (4) defines the term "royalties" as payment of any kind made as consideration
for the use of, or the right to use, copyrights of literary, artistic, or scientific works, copyrights of
motion picture films or films or tapes used for radio or television broadcasting, patents, designs,
models, plans, secret processes or formulae, trademarks, or other like property or rights, or
knowledge, experience, or skill (know-how), or ships or aircraft (but only if the lessor is a person
not engaged in the operation in international traffic of ships or aircraft). The term also includes
gains derived from the sale, exchange, or other disposition of any such property or rights (other
than ships or aircraft) to the extent the amounts realized on such sale, exchange or other
disposition for consideration are contingent on the productivity, use, or disposition of the
property or rights. If the amounts realized are not so contingent, the provisions of Article 16
(Capital Gains) will apply. The term "royalties" as used in the Convention does not include any
royalties, rentals or other amounts paid in respect of the operation of mines, quarries, or other
natural resources, which are covered by Article 15 (Income from Real Property).

If excessive royalties are paid to a related person, paragraph (5) provides that the
provisions of the Article do not apply to the excessive portion of the royalty. The excessive
portion may be taxed by each Contracting State according to its own law, including the
Convention where applicable. Thus, in the case of the United States, the excessive portion may
be treated as a dividend or interest, or in whatever other manner is appropriate.

As noted under paragraph (3) of Article 6 (Source of Income), royalties described in
paragraph (4), including contingent gains, will be treated as income from sources within a
Contracting State only to the extent they are payments for the use of, or the right to use, property
or rights described in paragraph (4) within that Contracting State.

This Article is subject to the saving clause of paragraph (4) of Article 4 (General Rules of
Taxation). Therefore, royalties derived by a citizen of the source Contracting State may be taxed
by that Contracting State without regard to this Article.

                     ARTICLE 15
             Income from Real Property

Under paragraph (1), income from real property, including royalties and other payments
in respect of the exploitation of natural resources and gains derived from the sale, exchange or
other disposition of such property or of the right giving rise to such royalties or other payments,
may be taxed by the Contracting State in which the real property or natural resources are
situated. However, income from real property does not include interest on indebtedness secured
by real property (e.g., mortgages) or secured by a right giving rise to royalties or other payments
in respect of the exploitation of natural resources. Such interest income is covered by Article 13
(Interest).

Paragraph (1) applies to income derived from the usufruct, direct use, letting, or use in
any other form of real property.

                     ARTICLE 16
                    Capital Gains

Under paragraph (1), a resident of one Contracting State will be exempt from tax by the
other Contracting State on gains from the sale, exchange, or other disposition of capital assets,
e.g., stock or securities. However, the exemption does not apply if
(1) the gain is from the sale, exchange or other disposition of property described
in Article 15 (Income from Real Property) situated within the other Contracting State;
(2) the recipient of the gain has a permanent establishment in the other
Contracting State and the property giving rise to the gain is effectively connected with the
permanent establishment or
(3) the individual recipient of the gain maintains a fixed base in the other
Contracting State for a period or periods aggregating 183 days or more during the taxable
year and the property giving rise to the gain is effectively connected with the fixed base,
or the individual recipient of the gain is present in the other Contracting State for a period
or periods aggregating 183 days or more during the taxable year.

The term "day" for purposes of the physical presence tests contained in the Convention with
respect to an individual means a calendar day during any portion of which the individual is
physically present in the relevant Contracting State.

Under paragraph (2), the provisions of Article 15 (Income from Real Property) will apply
to real property gains, and the provisions of Article 8 (Business Profits) will apply to gains
effectively connected with a permanent establishment.

If the recipient of the gain is a citizen of the other Contracting State, that Contracting
State may tax the recipient without regard to this Article because of the saving clause of
paragraph (4) of Article 4 (General Rules of Taxation).

                     ARTICLE 17
       Investment or Holding Companies

This Article provides that a corporation of one Contracting State deriving dividends,
interest, royalties or capital gains from sources within the other Contracting State will not be
entitled to the benefits of Articles 12 (Dividends), 13 (Interest), 14 (Royalties) or 16 (Capital
Gains) if by reason of special measures the tax imposed on such corporation by the firstmentioned
Contracting State with respect to such dividends, interest, royalties or capital gains is
substantially less than the tax generally imposed by such Contracting State on corporate profits,
and twenty-five percent or more of the capital of such corporation is held of record or is
otherwise determined, after consultation between the competent authorities of the Contracting
States, to be owned, directly or indirectly, by one or more persons who are not individual
residents of the first-mentioned Contracting State (or, in the case of a Korean corporation, who
are citizens of the United States). For purposes of applying this Article it is intended that the
requisite direct or indirect ownership be tested at the individual shareholder level.

The purpose of this Article is to deal with potential abuse which could occur if one of the
Contracting States provided preferential rates of tax for investment or holding companies. In the
absence of this Article, residents of third countries could organize a corporation in the
Contracting State extending the preferential rates for the purpose of making investments in the
other Contracting State. The combination of low tax rates in the first Contracting State and the
reduced rates or exemptions in the other Contracting State would enable the third country
residents to realize unintended benefits. Existing Code provisions dealing with the taxation of
capital gains do not make this Article applicable with respect to capital gains.

                    ARTICLE 18
         Independent Personal Services

In dealing with the taxation of income from personal services the Convention
distinguishes between "independent" and "dependent" personal services.

Personal services performed in an independent capacity, or independent personal
services, are services performed by an individual for his own account where he receives the
income and bears the losses arising from such services. If an individual is an independent
contractor he is considered as rendering independent personal services. Generally, services
rendered by physicians, lawyers, engineers, architects, dentists and accountants performing
personal services as sole proprietors or partners are independent personal services.

Under paragraph (1), income derived by an individual resident of one Contracting State
from the performance of personal services in an independent capacity may be taxed by that
Contracting State. Except as permitted by paragraph (2), such income will be exempt from tax by
the other Contracting State.

Under paragraph (2) such income derived in the other Contracting State may be taxed by
that other Contracting State if
(1) the individual is present therein for a period or periods aggregating 183 days or more
in the taxable year;
(2) the income exceeds $3,000 or its equivalent in Korean won in the taxable year; or
(3) the individual maintains a fixed base therein for a period or periods aggregating 183
days or more in the taxable year (but only on such income attributable to the fixed base).

Under paragraph (4) of Article 4 (General Rules of Taxation), the other Contracting State may
also tax any individual who is a citizen of that Contacting State without regard to this Article.

                      ARTICLE 19
            Dependent Personal Services

Under paragraph (1), subject to Articles 20 (Teachers), 21 (Students and Trainees), 22
(Governmental Functions) and 23 (Private Pensions and Annuities), wages, salaries, and similar
remuneration derived by an individual who is a resident of one Contracting State from labor or
personal services performed as an employee may be taxed by that Contracting State. Except as
provided by paragraph (2), such remuneration derived from sources within the other Contracting
State may also be taxed by that other Contracting State. It is intended that for purposes of the
Convention the term "wages, salaries and similar remuneration" includes income from services
performed as an officer of a corporation.

Under paragraph (2) such remuneration derived by an individual resident of one
Contracting State will be exempt from tax by the other Contracting State if:
(a) the individual is present in that other Contracting State for a period or periods
aggregating less than 183 days in the taxable year;
(b) the individual is an employee of a resident of the first-mentioned Contracting
State or of a permanent establishment maintained in the first-mentioned Contracting State
by a resident of a State other than that first-mentioned State;
(c) the remuneration is not borne as such by a permanent establishment which the
employer has in that other Contracting State; and
(d) the income does not exceed $3,000 or its equivalent in Korean won.

Such income may nevertheless be taxed by that other Contracting State if the individual is a
citizen of that Contracting State, because of paragraph (4) of Article 4 (General Rules of
Taxation).

Under paragraph (3), notwithstanding paragraph (2), remuneration derived by an
individual from the performance of labor or personal services as an employee aboard ships or
aircraft operated by a resident of a Contracting State in international traffic will be exempt from
tax by the other Contracting State if such individual (even if a resident of a State other than a
Contracting State) is a member of the regular complement of the ship or aircraft. However, this
paragraph is also subject to the saving clause of paragraph (4) of Article 4 (General Rules of
Taxation) so that the other Contracting State may tax a citizen or resident of that other
Contracting State without regard to this paragraph.

                     ARTICLE 20
                       Teachers

Paragraph (1) provides that where a resident of one Contracting State is invited by the
Government of the other Contracting State, a political subdivision, or a local authority thereof, or
by a university or other recognized educational institution in that other Contracting State to come
to that other Contracting State for a period not expected to exceed two years for the purpose of
teaching or engaging in research, or both, at a university or other recognized educational
institution, and such resident comes to that other Contracting State primarily for such purpose,
his income from personal services for teaching or research at the university or educational
institution will be exempt from tax by that other Contracting State for a period not exceeding two
years from the date of his arrival in that other Contracting State.

Since a temporary visit may be of such a duration that an individual may lose his status as
a resident of the Contracting State of which he was a resident at the time he became eligible for
the benefits of this Article, the individual need only be a resident of such Contracting State at the
beginning of his visit. However, if the individual becomes a citizen of, or acquires immigrant
status in, the other Contracting State, that other Contracting State may tax the individual without
regard to this Article. See paragraphs (4) and (5)(b) of Article 4 (General Rules of Taxation). If
the individual's visit exceeds a period of two years from the date of his arrival, the exemption
applies only to the income received by the individual before the expiration of such two year
period.

Pursuant to paragraph (2), this Article does not apply to income from research undertaken
primarily for the private benefit of a specific person or persons.

                     ARTICLE 21
               Students and Trainees

Paragraph (1) provides that an individual who is a resident of one Contracting State at the
time he becomes temporarily present in the other Contracting State and who is temporarily
present therein for the primary purpose of studying at a university or other recognized
educational institution in that other Contracting State, securing training required to qualify him to
practice a profession or professional specialty, or studying or doing research as a recipient of a
grant, allowance, or award from a governmental, religious, charitable, scientific, literary, or
educational organization, will be exempt from tax by that other Contracting State for a period not
exceeding five taxable years from the date of his arrival in that other Contracting State on:
(1) Remittances from abroad for the purpose of his maintenance, education, study,
research or training;
(2) The grant, allowance, or award; and
(3) Income from personal services performed in the other Contracting State not in excess
of $2,000 or its equivalent in Korean won for any taxable year.

Under paragraph (2), an individual who is a resident of one Contracting State at the time
he becomes temporarily present in the other Contracting State and who is temporarily present
therein as an employee of, or under contract with, a resident of the first-mentioned Contracting
State, for the primary purpose of acquiring technical, professional, or business experience from a
person other than that resident of the first-mentioned Contracting State or other than a person
related to such resident, or studying at a university or other recognized educational institution in
that other Contracting State, will be exempt from tax by that other Contracting State for a period
of twelve consecutive months, on income from personal services not in excess of $5,000 or its
equivalent in Korean won.

Under paragraph (3), an individual who is a resident of one Contracting State at the time
he becomes temporarily present in the other Contracting State and who is temporarily present
therein for a period not exceeding one year, as a participant in a program sponsored by the other
Contracting State, for the primary purpose of training, research, or study, will be exempt from
tax by the other Contracting State with respect to his income from personal services in respect of
such training, research, or study performed in that other Contracting State in an aggregate
amount not in excess of $10,000 or its equivalent in Korean won.

Under paragraph (4), the benefits provided in paragraph (1) and the benefits provided
under Article 20 (Teachers) may extend only for such period of time, not to exceed five taxable
years from the date of the individual's arrival, as may reasonably or customarily be required to
effectuate the purpose of the visit.

If an individual qualifies for the benefits of more than one of the provisions of Articles 20
(Teachers) and 21 (Students and Trainees), such individual may choose the most favorable
provision but may not claim the benefits of more than one provision in any taxable year as a
means of avoiding the limitations provided. Thus, for example, an individual who comes to the
other Contracting State for the primary purpose of studying may be able to qualify under either
paragraph (2) or (3) of this Article. However, he cannot combine the maximum exclusion limits
in those two paragraphs to exclude $15,000 during the taxable year. The exclusions permitted by
the Convention are in addition to any exclusions, exemptions, deductions, credits or other
allowances to which the individual is entitled under the laws of the Contracting States. If the
individual becomes a citizen of, or acquires immigrant status in, the other Contracting State, that
other Contracting State may tax the individual without regard to this Article. See paragraphs (4)
and (5)(b) of Article 4 (General Rules of Taxation).

                    ARTICLE 22
             Governmental Functions

Under this Article, wages, salaries, and similar remuneration, including pensions or
similar benefits, paid from public funds of one Contracting State to a citizen of that Contracting
State for labor or personal services performed as an employee of that Contracting State or
instrumentality thereof in the discharge of governmental functions will be exempt from tax by
the other Contracting State.

If the citizen becomes a citizen of, or acquires immigrant status in, the other Contracting
State, that other Contracting State may tax the individual without regard to this Article. See
paragraphs (4) and (5)(b) of Article 4 (General Rules of Taxation).

                      ARTICLE 23
           Private Pensions and Annuities

Except as provided in Article 22 (Governmental Functions), pensions and other similar
remuneration paid to an individual who is a resident of a Contracting State in consideration of
past employment will be taxable under paragraph (1) only in that Contracting State. Thus, private
pensions and similar remuneration derived from sources within one Contracting State by an
individual resident of the other Contracting State in consideration of past employment are
exempt from tax in the first-mentioned Contracting State. The term "pensions and other similar
remuneration" is defined in paragraph (3) as periodic payments made after retirement or death in
consideration for services rendered, or by way of compensation for injuries received in
connection with past employment. The term does not include social security payments covered in
Article 24 (Social Security Payments).

Paragraph (2) provides that alimony and annuities paid to an individual resident of a
Contracting State will be taxable only in that Contracting State. The term "annuities" is defined
in paragraph (4) as a stated sum paid periodically at stated times during life or during a specified
number of years, under an obligation to make the payments in return for adequate and full
consideration (other than for services rendered). The term "alimony" is defined in paragraph (5)
as periodic payments made pursuant to a decree of divorce, separate maintenance agreement, or
support or separation agreement which is taxable to the recipient under the internal laws of the
Contracting State of which he is a resident. Thus, the term "alimony" would not include a
payment which would not be taxable to the recipient under the laws of the Contracting State in
which the recipient is a resident even though such payment is made pursuant to a decree of
divorce or of separate maintenance agreement.

This Article is subject to the savings clause of paragraph (4) of Article 4 (General Rules
of Taxation). Therefore, individuals who are citizens of a Contracting State may be taxed by that
Contracting State without regard to this Article.

                    ARTICLE 24
            Social Security Payments

This Article provides that social security payments and other public pensions, e.g.,
railroad retirement benefits, paid by one Contracting State to an individual who is a resident of
the other Contracting State (or in the case of such payments by Korea, to an individual who is a
citizen of the United States, i.e., such payments by Korea to United States citizens or residents
will be exempt from tax by the United States) will be taxable only in the first-mentioned
Contracting State. Payments described in Article 22 (Governmental Functions) are not covered
by this Article.

                    ARTICLE 25
   Exemption from Social Security Taxes

This Article provides an exemption from social security taxes for Korean residents
working in Guam, on a temporary non-immigrant basis, similar to the exemption contained in the
Internal Revenue Code for residents of the Philippines working in Guam.

Specifically, paragraph (1) provides for an exemption from taxes imposed under Chapter
21 of the Internal Revenue Code with respect to wages paid for services performed in Guam by a
resident of Korea while in Guam on a temporary basis as a nonimmigrant alien admitted to
Guam pursuant to section 101(a)(15)(H)(ii) of the United States Immigration and Nationality Act
(8 U.S.C. 1101(a)(15)(H)(ii)).

Paragraph (2) provides that the exemption shall continue only so long as the similar
exemption for residents of the Republic of the Philippines provided by section 3121(b)(18) of the
Internal Revenue Code.

                   ARTICLE 26
      Diplomatic and Consular Officers

This Article provides that nothing in the Convention will affect the fiscal privileges of
diplomatic and consular officials under the general rules of international law or under the
provisions of special agreements. This is merely a special case of the general rule provided in
paragraph (2) of Article 4 (General Rules of Taxation).

                    ARTICLE 27
      Mutual Agreement Procedure

When a resident of one Contracting State considers that the action of one or both
Contracting States results or will result for him in taxation not in accordance with the
Convention, he may, notwithstanding the remedies provided by the national laws of the
Contracting States, present his case to the competent authority of the Contracting State of which
he is a resident. A resident of a Contracting State need not, although it is anticipated that in the
normal situation he will, exhaust his other administrative or judicial remedies prior to resorting
to the use of the mutual agreement procedure. If the claim is considered to have merit by the
competent authority, that competent authority must endeavor to come to an agreement with the
competent authority of the other Contracting State with a view to the avoidance of taxation
contrary to the Convention.

Paragraph (2) requires the competent authorities of the two Contracting States to
endeavor to resolve by mutual agreement any difficulties or doubts arising as to the application
of the Convention. In particular, the competent authorities may agree to the same attribution of
industrial or commercial profits to a resident of one Contracting State and its permanent
establishment situated in the other Contracting State; the same allocation of income, deductions,
credits, or allowances between a resident of one Contracting State and any related person; the
same determination of the source of particular items of income; uniform accounting for income
and deductions; and the same meaning of any term used in this Convention.

Under paragraph (3), the competent authorities may communicate with each other
directly and, when advisable, meet together for an oral exchange of opinions, for the purpose of
reaching an agreement.

Under paragraph (4), in cases in which the competent authorities reach an agreement,
taxes will be imposed on such income, and refund or credit of taxes allowed, by the Contracting
States in accordance with such agreement. This permits the issuance of a refund or credit
notwithstanding procedural barriers otherwise existing under a Contracting State's law, such as
the statute of limitations. However, it does not authorize imposition of additional taxes after the
statute of limitations has run.

                   ARTICLE 28
          Exchange of Information

Paragraph (1) provides for a system of administrative cooperation between the competent
authorities of the two Contracting States by requiring an exchange of information pertinent to the
carrying out of the Convention and for the prevention of fraud or for the administration of
statutory provisions concerning taxes to which this Convention applies provided the information
is of a class that can be obtained under the laws and administrative practices of each Contracting
State with respect to its own taxes. The competent authorities may exchange information in
connection with tax compliance generally, not merely illegal acts or crimes.

Under paragraph (2) information exchanged must be treated as secret and cannot be
disclosed except when disclosed to persons concerned with, or made part of a public record with
respect to the assessment, collection, enforcement or prosecution in respect of taxes which are
the subject of the Convention. Thus, disclosure is not prohibited as a part of a public proceeding
before a court or administrative body.

Under paragraph (3) no information shall be exchanged which would be contrary to
public policy.

Under paragraph (4) and if specifically requested by the competent authority of one of the
Contracting States, the competent authority of the other Contracting State shall provide
information in the form of depositions of witnesses and copies of unedited original documents
(including books, papers, statements, records, accounts, or writings), to the same extent such
depositions and documents can be obtained under the laws and administrative practices of each
Contracting State with respect to its own taxes.

Under paragraph (5) the exchange of information may be on either a routine basis or on
request with reference to particular cases. The competent authorities may agree on the list of information to be furnished on a routine basis.

Paragraphs (6) and (7) provide for notification and text transmittal at least once a year of
amendments of the tax laws referred to in paragraph (1) of Article 1 (Taxes Covered), of adopted
taxes referred to in paragraph (2) of that Article, or of published material concerning application
of the Convention, whether in the form of regulations, rulings or judicial decisions.

Under paragraph (3) of Article 1 (Taxes Covered), the provisions of this Article extend to
taxes of every kind imposed at the National level.

                   ARTICLE 29
            Extension to Territories

Under paragraph (1), either Contracting State may, at any time while the Convention
continues in force, by a written notification given to the other Contracting State through
diplomatic channels, declare its desire that the Convention, either in whole or in part or with such
modifications as may be found necessary for special application in a particular case, shall extend
to all or any of the areas (to which the Convention is not otherwise applicable) for whose
international relations it is responsible and which impose taxes substantially similar in character
to those which are the subject of the Convention. When the other Contracting State has, by a
written communication through diplomatic channels, signified to the first-mentioned Contracting
State that such notification is accepted in respect of such area or areas, and the notification and
communication have been ratified and instruments of ratification exchanged, the Convention, in
whole or in part, or with such modifications as may be found necessary for special application in
a particular case, as specified in the notification, will apply to the area or areas named in the
notification and will enter into force and effect on and after the date or dates specified therein.
None of the provisions of the Convention will apply to any such area in the absence of such
acceptance and exchange of instruments of ratification in respect of that area.

Under paragraph (2), at any time after the date of entry into force of an extension under
paragraph (1), either Contracting State may, by six months' prior notice of termination given to
the other Contracting State through diplomatic channels, terminate the application of the
Convention to any area to which it has been extended under paragraph (1). In such event the
Convention will cease to apply and have force and effect, beginning on or after the first day of
January next following the expiration of the six-month period, to the area or areas named therein,
but without affecting its continued application to the United States, Korea, or to any other area to
which it has been extended under paragraph (1).

Pursuant to paragraph (3), in the application of the Convention in relation to any area to
which it is extended by notification by Korea or the United States, reference to "Korea" or the
"United States", as the case may be, shall be construed as referring to that area.

Under paragraph (4), termination in respect of the United States or Korea of the
Convention under Article 32 (Termination) will unless otherwise expressly agreed by both
Contracting States, terminate the application of the Convention to any area to which the
Convention has been extended under this Article by the United States or Korea.

                    ARTICLE 30
           Assistance in Collection

This Article provides for mutual assistance in the collection of taxes where required to
ensure that the benefits of the Convention will only be extended to persons entitled to such
benefits. It does not in any way affect rights of residents of the Contracting States under the
Convention.

Paragraph (1) provides that each Contracting State will endeavor to collect on behalf of
the other Contracting State such taxes imposed by that other Contracting State as will ensure that
any exemption or reduced rate of tax granted under the Convention by that other Contracting
State will not be enjoyed by persons not entitled to such benefits.

Paragraph (2) makes clear, however, that in no case shall this Article be construed to
impose upon a Contracting State the obligation to carry out measures at variance with the laws,
administrative practices, or public policy of either Contracting State with respect to the collection
of its own taxes.

                 ARTICLE 31
             Entry into Force

This Article provides that the Convention is subject to ratification and for the exchange of
instruments of ratification. The Convention will enter into force on the thirtieth day following the
exchange of instruments of ratification. The Convention shall first have effect with respect to the
rate of withholding taxes and Article 25 (Exemption from Social Security Taxes), to amounts
paid on or after the first day of the second month following the date on which this Convention
enters into force; and with respect to other taxes for taxable years beginning on or after January 1
of the year following the date on which this Convention enters into force.

                   ARTICLE 32
                   Termination

This Article provides that the Convention will remain in force indefinitely, but that it may
be terminated by either Contracting State at any time after five years from the date it enters into
force. A Contracting State seeking to terminate the Convention must give at least six months'
notice through diplomatic channels. If the Convention is terminated, such termination will be
effective with respect to income of taxable years beginning (or, in the case of withholding taxes
and social security taxes, payments made) on or after January 1 next following the expiration of
the six month period.

                 EXCHANGE OF NOTES

In notes exchanged at the time of the signing of the treaty the United States noted that the
Korean Government had stressed the need for provisions in the Convention which would
constitute special incentives to promote the flow of United States capital and technology to
Korea. While observing that the United States could not agree to such provisions, the United
States did offer assurances that, when circumstances permit, the United States would be prepared
to resume discussions with a view to incorporating provisions into the Convention which will
minimize the interference of the United States tax system with incentives offered by the
Government of Korea. These provisions would be consistent with income tax policies of the
United States Government regarding other developing countries.

In the same exchange of notes, the Korean Government confirmed that the definition of
Korean tax in paragraph (1) of Article 1 of the Convention includes the Korean Defense Tax
assessed on the taxes referred to in that definition, i.e., the Korean income tax and corporation
tax. The Defense Tax is levied as a surcharge on a number of Korean taxes including the income
tax and the corporation tax. The treaty applies only to those parts of the Defense Tax levied with
respect to the income and corporation taxes.

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