CORPORATE RESIDENTS OF FRANCE WILL BE SUBJECT TO FIVE PERCENT BRANCH PROFITS TAX UNDER U.S.-FRANCE TREATY.

Notice 89-73

Section 1.884-1T(h)(4)(i)(B) of the Temporary Income Tax Regulations lists the rates of tax imposed under section 884 of the Internal Revenue Code of 1986 (the branch profits tax) on foreign corporations that (1) are residents of certain countries that have an income tax treaty with the United States and (2) qualify for treaty benefits with respect to the branch profits tax. The regulation reserved with respect to the rate of tax imposed on corporations resident in France. The regulation will be amended to specify a rate of 5 percent for corporations that are residents of France and are entitled to treaty benefits with respect to the branch profits tax.

ADMINISTRATIVE PRONOUNCEMENT

This documents serves as an "administrative pronouncement" as that term is described in section 1.6661-3(b)(2) of the Income Tax Regulations and may be relied upon to the same extent as a revenue ruling or revenue procedure.

EFFECTIVE DATE

This amendment will be effective for taxable years beginning after December 31, 1986.

DRAFTING INFORMATION

The principal author of this notice is Elizabeth U. Karzon of the Office of the Associate Chief Counsel (International). For further information about the Notice, call Elizabeth U. Karzon at (202) 566-3160 (not a toll-free call), or write to CC:INTL, Room 5537, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington D.C. 20224.