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I had the same issue - had a special offers Paperwhite (imported via a local bookshop), wanted to get rid of the ads after getting Amazon's cover for it (the one with the nifty feature of starting the Kindle upon opening the cover) - so I changed my address to a US one under country settings and changed one of my (non-US-issued) credit cards' billing address temporarily to that same US address.
I had enough gift card funds applied on my account, but it wouldn't let me just use that - it required a credit card with a US billing address, too.
In any case, once I'd done that, I could then pay the $20 to get rid of special offers. But I guess this may or may not work, depending on one's credit card issuer.
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