Note of Exchange 1

                                         LS No. 145237a
                                         Russian
                                         TM/

                                 REPUBLIC OF KAZAKHSTAN
                                 MINISTRY OF FINANCE

                          480091 Almaty 91, pr. Ablaykhana 97
                                 Telegraph address: Almaty 91,
                                 Teletype 251 ``Filin'' 64
                                 Tel: 62-92-97, Fax: 8-327-62-27-70

September 7, 1994

No. F-2 [illegible]- 4- 1 [illegible]1/5731 [sic]

TO:
The Ministry of Foreign Affairs
of the Republic of Kazakhstan

Re: Convention for the Avoidance of Double Taxation with the U.S.

The Ministry of Finance of the Republic of Kazakhstan has reviewed note no. MFA 723 of August 1, 1984, from the Embassy of the United States of America concerning technical corrections to the English and Russian texts of the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital between the Republic of Kazakhstan and the United States of America, signed on October 24, 1993, and consents to the incorporation of these changes into the originals of the texts on file in the Republic of Kazakhstan.

The following is understood to be the procedure for incorporating the changes into the original texts of the documents on file in Kazakhstan: the changes will not be physically entered directly on the signed copies; rather, notes will be exchanged that contain references to the locations at which changes need to be made. The original documents themselves will not be corrected and will remain unchanged. The signed notes with a list of the technical corrections will be filed with the signed copies of the Convention and will become a part of the official agreement.

After the exchange of notes consenting to the introduction of the relevant technical changes, the amendments will be deemed to have been made and [subject indeterminate] will be printed in corrected form upon publication in official editions of announcements of legislative acts of the highest legislative bodies of both States.

The Kazakh-language version, which is in the process of conformance, will also be corrected to reflect these changes.

In connection with the foregoing, the Ministry of Finance requests the Ministry of Foreign Affairs of the Republic of Kazakhstan to make the relevant corrections to the originals of the English and Russian texts of the Convention on file in the Republic of Kazakhstan by transmitting a reply note to the Embassy of the U.S. in Kazakhstan.

A draft note proposed by the U.S. and our version of the draft are attached, along with the text of the technical changes in Russian.

Deputy Minister

[signature] B. Aymakov

                        Embassy of the United States of America

                                                Almaty,
                                                August 15, 1994

Mr. Yerkishbay Derbisov
Minister of Finance
Republic of Kazakhstan
Almaty

Excellency:

I have the honor to refer to the Convention between the Government of the Republic of Kazakhstan and the Government of the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, signed at Almaty on October 24, 1993. There is attached to this note a Memorandum of Understanding with respect to certain provisions of that Convention for the purpose of giving guidance both to the taxpayer; and the tax authorities of our two countries in interpreting those provisions.

If the positions stated in the Memorandum of understanding meet with the approval of the Government of the Republic of Kazakhstan, this note and your note in reply thereto will indicate that our governments share a common understanding.

Accept, Excellency, the expression of my highest consideration.

Sincerely,

(s) William Courtney

Ambassador

1.

WITH REFERENCE TO PARAGRAPH 5 OF ARTICLE 6 (BUSINESS PROFITS):

It is understood that this provision will be applied only in exceptional cases. Where books and records audited by a certified public accountant are available to or readily obtainable by the competent authority, they will be considered adequate information on which gross income and deductions may be determined in order to measure the net income subject to tax.

2.

WITH REFERENCE TO PARAGRAPH 1c) ARTICLE 14 (INDEPENDENT PERSONAL SERVICES) AND PARAGRAPH 2a) OF ARTICLE 15 (INCOME FROM EMPLOYMENT):

The reference to ``183 days in any consecutive twelve month period'' or ``183 days in any twelve month period'' means ``183 days in any twelve month period beginning or ending in the taxable year concerned''.

3.

WITH REFERENCE TO PARAGRAPH 1c) OF ARTICLE 21 (LIMITATION ON BENEFITS):

It is understood that the term ``officially recognized exchange'', includes an exchange that is officially recognized by either contracting state and that is agreed upon by the competent authorities of both contracting states.

4.

WITH REFERENCE TO POINT 3a) OF THE PROTOCOL:

It is understood that the phrase ``both contracting states shall apply that lower rate'' means that both contracting states agree to promptly amend the convention to incorporate that lower rate.

5.

WITH REFERENCE TO ARTICLE 26 (EXCHANGE OF INFORMATION):

Notwithstanding any provision of the law of either contracting state, the information that may be exchanged under this article includes information from bank documents, including bank documents of third parties involved in transactions with taxpayer(s), and the information will be made available in civil, as well as criminal tax investigations.

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