AFTER tedious negotiations which lasted more than 30 years, Thailand finally signed on Nov 26, 1966, a treaty with the United States to avoid double taxation, bringing the number of countries maintaining such bilateral treaties to 33.

The signing ceremony, witnessed by US President Bill Clinton, took place at the Royal Grand Palace, with the then Finance Minister Amnuay Viravan and US Ambassador William Itoh. Dr Amnuay still displays a photograph of this historic event in his living room.

The treaty, making double taxation or the levying of tax on the same revenue by both governments obsolete, was off to a rocky start. As Dr Suvarn Valaisathien, a tax expert, notes in his book ''Thai-US Double Tax Treaty'', the US government had initiated the treaty in 1965.

Sensing that it was losing the Vietnam War and would some day have to retreat militarily from the region, the US government feared it would create a ''political vacuum'' and open the door for the communists to expand, he says. The original spirit of the treaty had been aimed at encouraging US investors to establish their businesses here because they would be provided with a seven per cent investment tax credit, a privilege the US government had never extended to any other country before.

However, the treaty would only become effective after the Senate's ratification. As it turned out, several US senators did not agree with the treaty because they saw it as being discriminatory because it provided investment tax credit to US investors only in Thailand. After that false start, the vicissitudes of the treaty made it all the more difficult for both countries to conclude it.

The Bank of Thailand governor MR Chatu Mongol Sonakul was involved in the negotiations from the beginning when he was a junior Finance Ministry official. He would work on the treaty again in his capacity as the permanent-secretary for finance.

Indeed, the Thai side was quite reluctant to conclude the treaty this time, because, aside from the problem with maritime tax concessions, it would dampen the privileges provided by the Board of Investment.

The US also suspected the Thai side was not coming forth transparently by providing it with the English version of any new laws or regulations which might have implications for the treaty. Chatu Mongol said the Thai laws and regulations had never been officially translated.

However, the US did not press for the treaty in the early '90s because then bilateral trade ties had been strained over the issue of intellectual property rights. Later there was weightier ground to push for the treaty, at least on the US's part, because Clinton was then visiting the region. He attended the Asia-Pacific Economic Cooperation conference in Manila before he flew to Thailand, and signing the treaty would make his visit more important.

Meantime, Congress had endorsed a new draft which excluded the tax sparing clause, which meant that the US would not recognise BoI tax privileges or waivers granted to US companies in Thailand.

Suvarn has indeed written a remarkable book on the Thai-US tax treaty. The book, published by Thammaniti Co Ltd, is priced at Bt180. The Harvard and George Washington University graduate allocated his scarce time to academic research despite his heavy business schedule. He approached the treaty with his impeccable scholarly skills, seeking to explain, in layman terms, how Thai and US firms or individuals can benefit from this treaty.

In essence, the treaty provides an exemption from Thai corporate income tax if a US person does not have a ''permanent establishment'' in the Kingdom and the US government is authorised to tax its own resident. Should a US person have a permanent establishment in Thailand which shows profits Thailand will impose a corporate income tax on this income and the US will credit the Thai tax against the US tax.

The full text of the treaty in Thai and English has been appended to the book. After a brief introduction, which covers the background on the treaty's formation, Suvarn moves on to explain how individuals or corporations can benefit from this treaty through tax exemption, tax reduction and tax credit.

It also tackles the scope of the treaty, going into the definitions and details which cover personal scope, taxes covered, benefits, limitations on benefits, artists and sportsmen, social security payments, government service, students and trainees, teachers, termination, and so on.

The book is an excellent reference for both American and Thai investors along with legal scholars. Despite some technical terms, it is a good read for the scholars of law or others wishing to gain an insight into the Thai-US double tax treaty. Suvarn is not only reputed as a strong legal counsellor, he is also a first rate writer, both in Thai and English.