FROM THE OFFICE OF PUBLIC AFFAIRS

The United States and the Republic of Iceland have scheduled negotiations of a new income tax treaty. The negotiations are scheduled to begin in Reykjavik on August 21, 2000. The new treaty would replace the treaty currently in force between the two countries, which was signed on May 7, 1975.

There have been substantial changes in the tax laws of both countries during the past twenty-five years and the present treaty no longer adequately reflects current treaty policies of the U.S. and Iceland. The negotiations will be based on the U.S. and Icelandic model treaties, both of which draw heavily on the OECD model. The treaty will deal with the taxation of income from business activities, investment, and personal services. It will contain provisions to avoid double taxation, ensure nondiscrimination, and prevent abuse of the treaty. It will also provide for exchange of information and other administrative cooperation between the tax authorities of the two countries.

The Treasury Department invites written comments from the public regarding the upcoming negotiations. Comments should be sent to Philip West, International Tax Counsel, Room 1000 Main Treasury, Washington, D.C. 20220, or faxed to (202) 622-0646.