FROM THE OFFICE OF PUBLIC AFFAIRS

The Treasury Department today announced that U.S. Ambassador Nancy Ely-Raphel and Slovenian Ministry of Finance State Secretary Milojka Kolar-Celarc signed a new income tax treaty between the United States and Slovenia in connection with President Clinton's visit to Ljubljana. This treaty, if ratified, will be the first between the United States and a country in the former area of Yugoslavia.

"Slovenia has made astounding progress in the transition from a closed economy to an open one," said Assistant Secretary for Tax Policy, Donald C. Lubick. "This treaty demonstrates that we are willing to act quickly to establish a treaty relationship with newly-industrialized countries when they have made the necessary progress and preparations."

The proposed treaty with Slovenia 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 Organization for Economic Cooperation and Development (OECD) Model. As with all bilateral tax treaties there are some variations. In the proposed treaty, these differences reflect particular aspects of Slovenian law and treaty policy, the interaction of U.S. and Slovenian law and U.S.-Slovenian economic relations.

The proposed treaty is subject to ratification and will enter into force upon the exchange of instruments of ratification. It will have effect, with respect to taxes withheld at source, for amounts paid or credited on or after the first day of the third month following the date the treaty enters into force. In other cases the treaty will have effect with respect to taxable years beginning on or after the first day of January following the date on which the treaty enters into force.