Article 1-3

This Convention shall apply to persons who are residents of one or both of the Contracting States.

(1)

This Convention shall apply to taxes on income imposed by each Contracting State.

(2)

The taxes existing at present, to which the Convention applies, are:

(a)

In the case of the Polish People's Republic:

(i)

The income tax,

(ii)

The tax on salaries and wages, and

(iii)

The equalization tax (Surtax), and

(b)

In the case of the United States of America, the Federal income taxes imposed by the Internal Revenue Code (other than employment taxes imposed by chapters 2 and 21).

(3)

The Convention shall also apply to any identical or substantially similar taxes which are subsequently imposed in addition to, or in place of, the existing taxes.

(4)

For the purpose of Article 21, this Convention shall also apply to taxes imposed at the national, state, or local level, subject to any limitation contained in paragraph (4) of Article 21.

(5)

The competent authorities of the Contracting States shall notify each other of any amendments of the tax laws referred to in paragraph (2) and of the adoption of any taxes referred to in paragraph (3) by transmitting the texts of any amendments or new statutes at least once a year.

(1)

In this Convention, unless the context otherwise requires:

(a)

The term ``Poland'' means the Polish People's Republic, and when used in a geographical sense the term ``Poland'' includes:

(i)

The territorial sea thereof, and

(ii)

The seabed and subsoil of the submarine areas adjacent to the coast thereof, but beyond the territorial sea, over which Poland exercises Sovereign rights, in accordance with international law, for the purpose of exploration for and exploitation of the natural resources of such areas, but only to the extent that the person, property, or activity to which this Convention is being applied is connected with such exploration or exploitation.

(b)

The term ``United States'' means the United States of America, and when used in a geographical sense the term ``United States'' means the States thereof and the District of Columbia and also includes:

(i)

The territorial sea thereof, and

(ii)

The seabed and subsoil of the submarine areas adjacent to the coast thereof, but beyond the territorial sea, over which the United States exercises sovereign rights, in accordance with international law, for the purpose of exploration for and exploitation of the natural resources of such areas, but only to the extent that the person, property, or activity to which this Convention is being applied is connected with such exploration or exploitation.

(c)

The terms ``Contracting State'' and ``the other Contracting State'' mean the Polish People's Republic or the United States of America as the context requires.

(d)

The term ``person'' includes an individual, a trustee or administrator, a company or juridical person, and any other body of persons.

(e)

The term ``company'' means any corporate body or any entity which is treated as a corporate body for tax purposes.

(f)

(i)

The term ``Polish company'' means a corporation, or any unincorporated entity treated as a Polish corporation for purposes of Polish tax, which is created or organized under the laws of Poland; and

(ii)

The term ``United States company'' means a corporation, or any unincorporated entity treated as a United States corporation for purposes of United States tax, which is created or organized under the laws of the United States or any state thereof or the District of Columbia.

(g)

The term ``resident of Poland'' means:

(i)

A Polish company, and

(ii)

Any person (except a company or any entity treated under Polish law as a company) resident in Poland for purposes of its tax, but in the case of a partnership, trustee or administrator only to the extent that the income derived by such person in that capacity is subject to Polish tax as the income of a resident.

(h)

The term ``resident of the United States'' means:

(i)

A United States company, and

(ii)

Any person (except a company or any entity treated as a corporation for United States tax purposes) resident in the United States for purposes of its tax, but in the case of a partnership, trustee or administrator only to the extent that the income derived by such person in that capacity is subject to United States tax as the income of a resident.

(i)

The terms ``enterprise of a Contracting State'' and ``enterprise of the other Contracting State'' mean, respectively, an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State.

(j)

The term ``competent authority'' means:

(i)

In the case of Poland, the Minister of Finance; and

(ii)

In the case of the United States, the Secretary of the Treasury or his delegate.

(k)

The term ``State'' means any national State, whether or not one of the Contracting States.

(l)

The term ``tax'' means any tax imposed by the United States or Poland, whichever is applicable, to which this Convention applies by virtue of Article 2.

(m)

The term ``international traffic'' means any voyage of a ship or aircraft operated by a resident of a Contracting State except where such voyage is confined solely to places within that Contracting State.

(2)

Any other term used in this Convention and not defined in this Convention shall, unless the context otherwise requires, have the meaning which it has under the laws of the Contracting State whose tax is being determined. Notwithstanding the preceding sentence, if the meaning of such a term under the laws of one of the Contracting States is different from the meaning of the term under the laws of the other Contracting State, or if the meaning of such a term is not readily determinable under the laws of one of the Contracting States, the competent authorities of the Contracting States may, in order to prevent double taxation or to further any other purpose of this Convention, establish a common meaning of the term for the purposes of this Convention.

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