- 14 -
would have specifically provided for such a link. The high
contracting parties, however, chose to treat the ACT as imposed
on "the corporation paying the dividend", and we adhere to that
language in our interpretation of the treaty.
Moreover, we find that the general structure of the U.S.-
U.K. Convention evidences the signatories' intent not to link the
availability of the shareholder credit to the corporate offset.
Pursuant to Article 10(2), the United Kingdom is required to
refund or pay to a 10-percent U.S. shareholder one-half of the
ACT to which an individual U.K. resident shareholder would have
been entitled. Such a refund is available to the 10-percent U.S.
shareholder regardless of the use the U.K. corporation makes of
the corporate offset.
Respondent argues that the U.S.-U.K. Convention is silent
with respect to situations where the corporate offset is
allocated to a subsidiary, and, therefore, the identity of the
payor of the ACT must be resolved pursuant to the first sentence
of Article 23(1): "In accordance with * * * the law of the
United States". That law, respondent contends, is contained in
the Technical Explanation.
The Technical Explanation, although it does not address the
issue of the allocation of the corporate offset, states:
ACT which reduces mainstream tax in any year or
years shall be attributable to any accumulated profits
of the year or years for which the mainstream tax is
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