- 23 - Convention and section 842(b) are consistent, petitioner concedes that section 842(b) applies in this case and that it owes the income and branch profits tax as determined by respondent in her statutory notices of deficiency. The parties present various alternative arguments based on provisions of Article VII and Article XXV. In deciding whether petitioner is entitled to relief from section 842(b) as a result of the Canadian Convention, we must determine whether: 1. Section 842(b), in requiring petitioner to report a minimum amount of ECNII, conflicts with the requirements of paragraphs 1, 2, and 7 of Article VII on how to determine the profits attributable to a permanent establishment; 2. section 842(b) violates paragraph 5 of Article VII, which requires a consistent method of profit attribution to be applied unless a good and sufficient reason to the contrary exists; or 3. section 842(b) violates Article XXV, paragraph (6) by levying taxation less favorably on petitioner than the Internal Revenue Code levies taxation on U.S. residents carrying on the same activities. We discuss these issues in the context of the relevant convention Articles. The issues before us are of first impression. III. Principles of Convention Obligations Before addressing the parties' arguments pertaining to specific convention provisions, we consider the principles for interpreting conventions. The goal of convention interpretation is to "give the specific words of a * * * [convention] a meaning consistent withPage: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Next
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