Compaq Computer Corporation and Subsidiaries - Page 14




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          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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