Article 1 identifies the persons who come within the scope of the Convention. Paragraph

1 provides that, in general, the Convention applies to persons who are residents of one or both of the Contracting States. The term "resident" is defined in Article 4 (Residence). The Convention may also apply to residents of third States. For example, paragraph 6 of Article 10 (Dividends) covers certain dividends derived by residents of third States and Article 26 (Exchange of Information) may apply to an exchange of information concerning residents of third States.

Paragraph 2 provides that the Convention shall not restrict any exclusion, exemption, deduction, credit or other allowance provided by the laws of either Contracting State or by any other agreement between the Contracting States. Thus, if a deduction would be allowed under the Internal Revenue Code of 1954 (“the Code”) for an item in computing the U.S. taxable income of a Barbadian resident, such deduction is generally available to such person in computing taxable income under the Convention. Paragraph 2 does not, however, authorize a taxpayer to make inconsistent choices between rules of the Code and rules of the Convention. Thus, if a taxpayer claims the benefits of a provision of the Convention, he must use the rules Convention relevant to such benefit and must use such rules consistently. In no event, however, are the rules of the Convention to increase U.S. tax liability from what that liability would be if there were no convention.

Paragraph 3 contains the traditional “saving clause” under which each Contracting State reserves the right to tax its residents, as determined under Article 4, as if the Convention had not come into effect. In the case of the United States, the "saving clause" applies to certain former citizens as well as to current citizens. Thus, a former U.S. citizen whose loss of citizenship had as one of its principle purposes the avoidance of tax will continue to be subject to U.S. income tax, in accordance with the provisions of section 877 of the Code, but only for a period of ten years following the loss of citizenship.

Paragraph 4 sets forth certain exceptions to the saving clause. These exceptions are, in general, necessary to assure that provisions of the Convention intended to reduce a resident's tax liability to his country of residence fulfill their intended objective. Subparagraph (a) provides that the saving clause does not affect the benefits provided under paragraph 2 of Article 9 (Associated Enterprises), under paragraphs 1b) and 4 of Article 18 (Pensions, Annuities, Alimony and Child Support) and Articles 23 (Relief from Double Taxation), 24 (NonDiscrimination) and 25 (Mutual Agreement Procedure). Thus, notwithstanding the saving clause, the benefits provided in these Articles are available to residents and citizens of a Contracting State.

Subparagraph (b) of paragraph 4 provides a second category of exceptions to the saving clause. Under this subparagraph, benefits of the enumerated articles are provided to persons who are residents of a Contracting State by the country of residence so long as they are not citizens of that State and do not have immigrant status in that State. This second category of exceptions includes benefits conferred under Articles 19 (Government Service), 20 (Students and

Apprentices) and 27 (Diplomatic Agents and Consular Officers). The term ''immigrant status'' refers to a person admitted to the United States as a permanent resident under U.S. immigration laws (i.e., holding a "green card").