(Archived Content)
The Treasury Department announced today that the United Statesand The Bahamas have exchanged diplomatic notes that bring into force the tax information exchange agreement between the two countries that was signed inWashington,DCin 2002. The Agreement enters into force onDecember 31, 2003.
The Agreement takes effect onJanuary 1, 2004, with respect to requests for information made in connection with criminal tax matters, and onJanuary 1, 2006, with respect to requests for information made in connection with civil tax matters.Once the Agreement is effective with respect to requests for information made in connection with civil tax matters, it will be consistent with the standards for an exchange of information agreement described in the Internal Revenue Code. The Code generallyallowsU.S.taxpayers to claim a tax deduction for expenses associated with a convention held in certain beneficiary countries with tax information exchange agreements with the United Statesto the same extent as a convention held in the United States.
Beginning onJanuary 1, 2006, The Bahamas will be considered part of the “North American area” for purposes of determining whetherU.S.taxpayers may deduct expenses incurred in attending conventions, business meetings and seminars in The Bahamas. Convention expenses that are incurred byU.S.taxpayers for meetings in geographical areas considered part of the North American area and that otherwise are deductible as ordinary and necessary business expenses are allowed as deductions without regard to the additional limitations applicable to deductions for expenses associated with foreign conventions. A list of geographical areas that currently are included in the North American area for purposes of these convention expense deduction rules is provided in Revenue Ruling 2003-109.
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