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petitioner operates its insurance business in the United States
through a U.S. permanent establishment.
Congress can override a convention provision by enacting a
subsequent statute. Reid v. Covert, 354 U.S. 1, 18 (1957).
Congress ratified the Canadian Convention in 1984. Convention,
Sept. 26, 1980, T.I.A.S. No. 11087, 1986-2 C.B. 258 (effective
August 16, 1984). It initially appears that Congress sought to
override the Canadian Convention in the Omnibus Budget
Reconciliation Act of 1987, Pub. L. 100-203, 101 Stat. 1330, by
amending section 842 to incorporate subsection 842(b). In the
conference report to section 842(b), Congress stated, however,
that it did "not intend to apply the general principle that, in
the case of a conflict, a later enacted statute prevails over
earlier enacted statutes or treaties". H. Conf. Rept. 100-495
(1987) 915, 983, 1987-3 C.B. 193, 263.
Respondent contends that we should construe the Canadian
Convention so as to harmonize the convention with the statute.
If, however, we find that the Canadian Convention and section
842(b) conflict, respondent concedes that the Convention prevails
and that no deficiencies in income tax or branch profits tax for
the years at issue exist.
Petitioner does not challenge the taxation of its actual
ECNII or respondent’s calculations of its minimum ECNII for any
of the years at issue. Accordingly, if we find that the Canadian
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