- 17 - revoked revenue rulings issued in connection with the Interest Equalization Tax.10 DEFRA sec. 127(g)(3), 98 Stat. 652. In the instant case, the parties dispute whether petitioner qualifies for the transitional relief provided in DEFRA section 127(g)(3). In addition, the parties dispute whether, if petitioner is not eligible for relief under DEFRA section 127(g)(3), petitioner is nonetheless exempt from withholding liability pursuant to article VIII(1) of the income tax treaty between the United States and the Netherlands, as extended to the Netherlands Antilles (U.S.-Netherlands income tax treaty).11 Some background is helpful in understanding the transition provisions of DEFRA section 127(g)(3). In the 1960's, U.S. companies began to raise capital through the Eurobond market by using specialized finance subsidiaries. Such a finance subsidiary was organized exclusively to issue debt in the Eurobond market and lend the proceeds to its U.S. parent or domestic or foreign affiliates in exchange for a promissory note. The U.S. parent or other affiliate would typically guarantee the 10 The Interest Equalization Tax was enacted in the Interest Equalization Tax Act, Pub. L. 88-563, 78 Stat. 809 (1964), and expired on June 30, 1974. 11 Convention with Respect to Taxes on Income and Certain Other Taxes, Apr. 29, 1948, U.S.-Neth., 62 Stat. 1757, TIAS 1855 (extended to the Netherlands Antilles by Protocol, June 15, 1955, 6 U.S.T. 3696, TIAS 3366; amended by Protocol, Oct. 23, 1963, 15 U.S.T. 1900, TIAS 5665; modified and supplemented by Convention, Dec. 30, 1965, 17 U.S.T. 896, TIAS 6051).Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
Last modified: May 25, 2011