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Exchange of Notes between the Government of Canada and the Government of the Republic of Korea constituting an Agreement for the Avoidance of Double Taxation of Income from the Operation of Ships or Aircraft [1974] CATSer 15 (15 November 1974)

E102331 - CTS 1974 No. 36

EXCHANGE OF NOTES BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE REPUBLIC OF KOREA CONSTITUTING AN AGREE­MENT FOR THE AVOIDANCE OF DOUBLE TAXATION OF INCOME FROM THE OPERATION OF SHIPS OR AIRCRAFT

I

The Minister of Foreign Affairs of the Republic of Korea to the Secretary of State for External Affairs of Canada

(Translation)

Seoul, November 15, 1974

The Honourable Allan Joseph MacEachen
Secretary of State for External Affairs
Canada

Excellency,

I have the honour to refer to conversations which have recently taken place between representatives of our two Governments concerning the con­clusion of an Agreement for the avoidance of double taxation of income derived from the operation of ships or aircraft in international traffic. As a result of these conversations, I have been instructed by my Government to propose that an Agreement be concluded between the Government of the Republic of Korea and the Government of Canada in the following terms:

1. The Government of the Republic of Korea shall exempt from income tax, the business tax and any other taxes on profits imposed by it, the earnings derived by a Canadian enterprise from the operation by that enterprise of ships or aircraft in international traffic.

2. The Government of Canada shall exempt from income tax and any other taxes on profits imposed by it, the earnings derived by a Korean enterprise from the operation by that enterprise of ships or aircraft in international traffic.

3. The tax exemption provided in paragraphs 1 and 2 above shall also apply to the income of a Korean or Canadian enterprise which participates in a pool, a joint business or an international organization engaged in the operation of ships or aircraft in international traffic.

4. For the purposes of this Agreement:

(a) "Canadian enterprise" shall mean the Government of Canada, a physical person ordinarily resident in Canada and not ordinarily resident in Korea and a corporation or other body of persons managed and controlled in Canada.

(b) "Korean enterprise" shall mean the Government of the Republic of Korea, a physical person ordinarily resident in the Republic of Korea and not ordinarily resident in Canada, and a corporation or other body of persons managed and controlled in the Republic of Korea.

5. As regards the application of this Agreement by one of the Contracting Governments, any term not otherwise defined shall, unless the context requires, have the meaning which it has under the laws of that Contracting Government relating to the taxes which are the subject of this Agreement.

6. This Agreement shall become effective with respect to taxation years commencing on or after the first day of January 1974.

7. This Agreement shall remain in force for an indefinite period but each Government may terminate it by sending a written note to the other Govern­ment at least six months in advance. In such event, the Agreement shall cease to be effective for taxation years beginning on or after the first day of January following the expiration of the six-month period.

If the foregoing proposals are acceptable to the Government of Canada, I propose that this Note and your reply shall constitute an Agreement between our two Governments, which will enter into force on the date of your reply.

Accept, Excellency, the renewed assurances of my highest consideration.

Dong-Jo Kim
Minister of Foreign Affairs

II

The Secretary of State for External Affairs of Canada to the Minister of Foreign Affairs of the Republic of Korea

Ottawa, November 15, 1974

No. FLA-660

His Excellency Kim Dong-Jo
Minister of Foreign Affairs
Republic of Korea.

Excellency,

I have the honour to refer to your Note of November 15, 1974, which reads as follows:

(See Korean Note of November 15, 1974)

I have the honour to inform your Excellency that the terms proposed in your Note are acceptable to the Government of Canada and to confirm that your Note and this reply, which is authentic in English and French, shall constitute an Agreement between our two Governments, which will enter into force on the date of this reply.

Accept, Excellency, the assurances of my highest consideration.

Allan J. MacEachen
Secretary of State for External Affairs

III

The Secretary of State for External Affairs of Canada to the Minister of Foreign Affairs of the Republic of Korea

Ottawa, November 15, 1974

No. FLA-661

His Excellency Kim Dong-Jo
Minister of Foreign Affairs
Republic of Korea

Excellency,

I have the honour to refer to the exchange of notes of November 15, 1974, constituting an agreement between the Government of Canada and the Gov­ernment of the Republic of Korea for the avoidance of double taxation of income derived from the operation of ships or aircraft in international traffic. The Canadian Government would be grateful for confirmation of its understanding that the agreement, which provides for a reciprocal tax exemption for 1974 and later years, shall in no way be construed as detracting from the same reciprocal tax exemption which has in tact been granted by both countries for 1973 and prior years.

Accept, Excellency, the renewed assurances of my highest consideration.

Allan J. MacEachen
Secretary of State for External Affairs

IV

The Minister of Foreign Affairs of the Republic of Korea to the Secretary of State for External Affairs of Canada

(Translation)

Seoul, November 15, 1974

The Honourable Allan Joseph MacEachen
Secretary of State for External Affairs
Canada

Excellency,

I have the honour to refer to your note of November 15, 1974 which reads as follows:

(See Canadian Note No. FLA-661 of November 15, 1974)

I have the honour to confirm that the Government of the Republic of Korea shares the Canadian Government's understanding set out in your Excellency's foregoing Note.

Accept, Excellency, the assurances of my highest consideration.

Dong-Jo Kim
Minister of Foreign Affairs