The Treasury Department announced Monday that U.S. Ambassador John F. Maisto and Venezuelan Minister of Foreign Affairs Miguel Angel Burelli Rivas signed a new income tax Convention and Protocol with Venezuela in Caracas. This tax convention, if ratified, will be the first between the United States and Venezuela and represents an important step in Treasury's goal of expanding the U.S. tax treaty network with emerging economies, particularly in Latin America.

The proposed convention with Venezuela generally follows the pattern of the 1996 U.S. Model Tax Convention, while incorporating some provisions found in recent U.S. treaties with other developing countries and in the OECD (Organization for Economic Cooperation and Development) Model. There are, as with all bilateral tax conventions, some variations from these norms. In the proposed convention, these differences reflect particular aspects of Venezuelan law and treaty policy, the interaction of U.S. and Venezuelan law, and U.S.- Venezuelan economic relations.

The proposed convention is subject to ratification and will enter into force when each contracting state has notified the other that the domestic requirements needed for entry into force have been completed. The proposed convention will have effect, with respect to taxes withheld at source, on amounts paid or credited on or after January 1 of the year following the date on which the convention enters into force. In other cases the convention will have effect with respect to taxable periods beginning on or after January 1 of the year following the date on which the convention enters into force.