Page:United States Statutes at Large Volume 99 Part 2.djvu/729

 PUBLIC LAW 99-239—JAN. 14, 1986

99 STAT. 1839

set forth in column numbered 1 of the Tariff Schedules of the United States and all products of the United States imported into 19 USC 1202. the Federated States of Micronesia or the Marshall Islands shall receive treatment no less favorable than that accorded like products of any foreign country with respect to customs duties or charges of a similar nature and with respect to laws and regulations relating to importation, exportation, taxation, sale, distribution, storage, or use.". SEC. 402. CONSTRUCTION OF SECTION 253 OF THE COMPACT.

48 USC 1681

(a) Subsection (a) of section 253 of the Compact shall not apply. Ante, p. 1820. (b) Subsection (b) of section 253 of the Compact shall apply only to individuals who are nonresidents and not citizens of the United States. SEC. 403. CONSTRUCTION OF SECTION 254 OF THE COMPACT.

48 USC 1681

The relief from liability referred to in the second sentence of section 254(a) of the Compact means only— Ante, p. 1821. (1) relief in the form of the foreign tax credit (or deduction in lieu thereof) available with respect to the income taxes of a possession of the United States, and (2) relief in the form of the exclusion under section 911 of the Internal Revenue Code of 1954. 26 USC 9ii. SEC. 404. CONSTRUCTION OF SECTION 255 OF THE COMPACT.

48 USC 1681

Section 255 of the (Ilompact shall be construed and applied as if it Ante, p. 1821. read as follows: "Section 255

"(a) EXTENSION OF SECTION 936 TO THE MARSHALL ISLANDS AND THE FEDERATED STATES OF MICRONESIA.—For purposes of section 936 of

the Internal Revenue Code of 1954, the Marshall Islands and the Federated States of Micronesia shall be treated as if they were possessions of the United States. "(b) EXCHANGE OF INFORMATION.—Subsection (a) shall not apply to the Marshall Islands and the Federated States of Micronesia (as the case may be) for any period sifter December 31, 1986, during which there is not in effect between the appropriate government and the Ignited States an exchange of information agreement of the kind described in section 274(h)(6)(C) (other than clause (ii) thereof) of the Internal Revenue Code of 1954. "(c) PROCEDURE I F SECTION 936 INCENTIVES REDUCED.—If the tax incentives extended to the Marshall Islands and the Federated States of Micronesia under subsection (a) are, at any time during which the Compact is in effect, reduced, the Secretary of the Treasury shall negotiate an agreement with the Marshall Islands and the Federated States of Micronesia under which, when such agreement is approved by law, they will be provided with benefits substantially equivalent to such reduction in benefits. If, within the 1 year period Eifter the date of the enactment of the Act making the reduction in benefits, an agreement negotiated under the preceding sentence is not approved by law, the matter shall be submitted to the Arbitration Board established pursuant to section 424 of the Compact. For purposes of Article V of Title Two of the Compact, the Secretary of the Treasury or his delegate shall be the member of such Board representing the Government of the United States. Any decision of such Board in the matter when approved by law shall be binding on the United States, except that such decision rendered is binding only as to whether the United States has provided the substantially equivalent benefits referred to in this subsection.".

"

26 USC 936.

26 USC 274. Taxes.

Ante, p. 1828.

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