Article 1-3

1.

This Convention shall apply to persons who are residents of one or both of the Contracting States and to other persons as specifically provided in the Convention.

2.

The Convention shall not restrict in any manner any exclusion, exemption, deduction, credit, or other allowance now or hereafter accorded:

a)

by the laws of either contracting State, or

b)

by any other agreement between the Contracting States.

3.

Notwithstanding any provision of the Convention except paragraph 4, a Contracting State may tax, in accordance with its domestic law, residents (as determined under Article 4 (Residence)) and citizens or former citizens of that State.

4.

The following benefits shall be conferred by a Contracting State notwithstanding the provisions of paragraph 3:

a)

under paragraph 2 of Article 7 (Adjustments to Income in Cases Where Persons Participate, Directly or Indirectly, in the Management, Control or Capital of Other Persons), paragraph b) of Article 17 (Pensions) and Articles 22 (Relief from Double Taxation), 23 (Non-discrimination) and 24 (Mutual Agreement Procedure); and

b)

under Articles 16 (Government Service), 18 (Students, Trainees and Researchers), and 26 (Members of Diplomatic Missions and Consular Officers) for individuals who are neither citizens of that State nor, in the case of the United States of America, individuals having immigrant status therein.

1.

The taxes to which this Convention shall apply are:

a)

in the United States of America: the federal income taxes imposed by the Internal Revenue Code (but excluding the accumulated earnings tax, the personal holding company tax, and social security taxes) and the excise taxes imposed with respect to the investment income of private foundations (hereafter referred to as United States tax).

b)

in the Russian Federation: taxes on profits and income provided by the laws ``On Taxes on Profits from Enterprises and Organizations'', ``On Taxation of Income of Banks'', ``On Taxation of Income from Insurance Activities'', and ``On the Income Tax on Individuals'' (hereafter referred to as Russian tax).

2.

The Convention shall apply also to any substantially similar taxes which are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes, including taxes which are substantially similar to those currently imposed by one Contracting State but not by the other Contracting State and which are subsequently imposed by the other State. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws and of any official published material concerning the application of the Convention, including explanations, regulations, rulings, or judicial decisions.

3.

The Convention shall also apply to any tax on capital described in subparagraph g) of paragraph 1 of Article 3 (General Definitions) which is imposed by either Contracting State as of the date of signature of the Convention or thereafter, but only if such capital tax is provided by federal legislation.

1.

For the purposes of this Convention, unless the context otherwise requires:

a)

the term ``Contracting State'' means the United States of America (the United States) or the Russian Federation (Russia) as the context requires;

b)

the term ``United States'' means the United States of America, but does not include Puerto Rico, the Virgin Islands, Guam, or any other United States possession or territory. When used in a geographical sense, the term ``United States'' includes the territorial sea, and also the economic zone and continental shelf in which the United States, for certain purposes, may exercise sovereign rights and jurisdiction in accordance with international law and in which the tax legislation of the United States is in force;

c)

the term ``Russia'' means the Russian Federation. When used in a geographical sense, the term ``Russian Federation'' or ``Russia'' includes the territorial sea, and also the economic zone and continental shelf in which the Russian Federation, for certain purposes, may exercise sovereign rights and jurisdiction in accordance with international law and in which the tax legislation of the Russian Federation is in force;

d)

the term ``person'' means an individual, an estate, a trust, a partnership, a company and any other body of persons;

e)

the term ``company'' means any entity which is treated as a body corporate for tax purposes. In the case of Russia this term means a joint stock company, a limited liability company or any other legal entity or other organization which is liable to a tax on profits;

f)

the term ``international traffic'' means any transport by a ship or aircraft, except when such transport is solely between places in one of the Contracting States;

g)

the term ``capital'' means movable and real property, and includes (but is not limited to) cash, stock or other evidences of ownership rights, notes, bonds or other evidences of indebtedness, and patents, trademarks, copyrights or other like right or property;

h)

the term ``competent authority'' means:

(i)

in the United States: the Secretary of the Treasury or his authorized representative; and

(ii)

in Russia: the Ministry of Finance of the Russian Federation or its authorized representative.

2.

As regards the application of the Convention by a Contracting State, any term not defined therein shall, unless the context otherwise requires or the competent authorities agree to a common meaning pursuant to the provisions of Article 24 (Mutual Agreement Procedure), have the meaning which it has under the laws of that State concerning the taxes to which this Convention applies.

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