TREATIES AND OTHER INTERNATIONAL ACTS SERIES 13059 

________________________________________________________________________ 

TAXATION 

Shipping and Aircraft 

 Agreement Between the 

UNITED STATES OF AMERICA 

and BAHRAIN 

Effected by Exchange of Notes 

Dated at Manama September 1 and 12, 1999 

 

 
 NOTE BY THE DEPARTMENT OF STATE 

 Pursuant to Public Law 89—497, approved July 8, 1966 

(80 Stat. 271; 1 U.S.C. 113)—

“. . .the Treaties and Other International Acts Series issued 

under the authority of the Secretary of State shall be competent 

 evidence . . . of the treaties, international agreements other than 

treaties, and proclamations by the President of such treaties and 

international agreements other than treaties, as the case may be, 

therein contained, in all the courts of law and equity and of maritime 

jurisdiction, and in all the tribunals and public offices of the 

United States, and of the several States, without any further proof 

or authentication thereof.” 
 BAHRAIN 

 Taxation: Shipping and Aircraft 

Agreement effected by exchange of notes 

Dated at Manama September 1, and 12, 1999; 

Entered into force September 12, 1999. 
EMBASSY OF THE

UNITED STATES OF AMERICA

No. 201

The Embassy of the United States of America

presents its compliments to the Ministry of Foreign

Affairs of the State of Bahrain and has the honor

to propose that the two Governments conclude an

agreement to exempt from income tax, on a reciprocal

basis, certain income derived from the international

operation of a ship or ships and aircraft as follows:

The Government of the United States of America,

in accordance with sections 872(b) and 883 (a) of the

U.S. internal revenue code of 1986, agrees to exempt

from U.S. federal income tax gross income derived from

the international operation of a ship or ships or

aircraft by individuals who are residents of Bahrain

(other than U.S. citizens or residents) and

corporations that are organised in Bahrain, in each

case, that are engaged in the international operation

of a ship or ships or aircraft. This exemption shall

be granted on the basis of equivalent exemptions

granted by Bahrain to individual residents of the

United States and to corporations organized in the

United States.
In the case of a Bahrain corporation, the

exemption shall apply only if the corporation meets

the ownership or public trading requirements of U.S.

Law. For purposes of such ownership requirements, the

Government of Bahrain shall be treated as an

individual resident of Bahrain.

Gross income derived from the international

operation of a ship or ships or aircraft includes:

--(1) income from the rental on a full (time or

voyage) basis of a ship or ships or aircraft used in

international transport;

--(ii) income from the rental on a bareboat basis of

a ship or ships or aircraft used in international

transport;

--(iii) income from the rental of containers and

related equipment used in international transport that

is incidental to income from the international

operation of a ship or ships or aircraft;

--(iv) gains from the sale or other alienation of a

ship or ships or aircraft used in international

transport; and

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--(v) income derived by an individual or corporation

otherwise engaged in the international operation of a

ship or ships or aircraft from active participation in

a pool, an alliance, joint venture, international

operating agency, or other venture, that is itself

engaged in the international operation of a ship or

ships or aircraft

The Embassy, on behalf of the Government of the

United states of America, proposes that if the

foregoing is acceptable to the Government of Bahrain,

this note and the Ministry's reply note shall

constitute an agreement between the two Governments,

which shall enter into force on the date of the

Ministry's reply note and shall have effect with

respect to taxable years beginning on or after

January 1, 1999. It shall remain in force until

terminated by either Government giving written notice

to the other Government through diplomatic channels.

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The Embassy of the United States avails itself of

this opportunity to renew to the Ministry of Foreign

Affairs of the State of Bahrain the assurance of its

highest consideration.

Embassy of the United States of America

Manama, September 1, 1999.

4
STATE OF BAHRAIN

MINISTRY OF FOREIGN AFFAIRS

6/100/231- 1 3306

12th September, 1999 Date .......

Note Verbale

The Ministry of Foreign Affairs of the State of Bahrain presents its compliments

to the Embassy of the United States of America to the State of Bahrain and has the

honour to acknowledge receipt of the Embassy's note of 1stSeptember, 1999

proposing an agreement to exempt from Bahrain tax gross income derived from

the international operation of a ship or ships or aircraft by individual residents of

the United States and by corporations organized in the United States, in each case,

that are engaged in the international operation of a ship or ships or aircraft. This

exemption shall be granted on the basis of equivalent exemptions granted by the

United States to individuals who are residents of Bahrain (other than U.S. citizens

or residents) and to corporations that are organized in Bahrain.

The terms of the agreement are as follows:

The Government of Bahrain agrees to exempt from Bahrain tax gross income

derived from the international operation of a ship or ships or aircraft by

individuals who are residents of the United States and corporations that are

organized in the United States, in each case, that are engaged in the international

operation of a ship or ships or aircraft.

This exemption is granted on the basis of equivalent exemptions granted by the

United States under the terms of your note of 1st September, 1999.

Gross income derived from the international operation of a ship or ships or aircraft

includes:

(i) income from the rental on a full (time or voyage) basis of ship or ships or

aircraft used in international transport;

(ii) income from the rental on a bareboat basis of a ship or ships or aircraft used

in international transport;
(iii) income from the rental of containers and related equipment used in

international transport that is incidental to income from the international

operation of a ship or ships or aircraft;

(iv) gains from the sale or other alienation of a ship or ships or aircraft used in

international transport; and

(v) income derived by an individual or corporation otherwise engaged in the

international operation of a ship or ships or aircraft from active

participation in a pool, in alliance, joint venture, international operating

agency, or other venture, that is itself engaged in the international operation

of a ship or ships or aircraft.

The Ministry of Foreign Affairs of the State of Bahrain confirms that the

Government of Bahrain accepts the proposal contained in the Embassy's Note

No.201 and that the Embassy's note and this note in reply constitute an agreement

between the two Governments, which shall enter into force on the date of this note

and shall have effect with respect to taxable years beginning on or after January 1,

1999. It shall remain in force until terminate by either Government giving written

notice to the other Government through diplomatic channels.

The Ministry of Foreign Affairs of the State of Bahrain takes this opportunity to

renew to the Embassy of the United States of America the assurances of its highest

consideration.

Ministry of Foreign Affairs

State of Bahrain

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12th September 1999