More Frustration Over Tax Treaty Delays

The U.S has income tax treaties with more than 60 countries, helping to advance global trade by reducing double taxation and providing more certainty in international business, among other items. In order to serve their purpose, income tax treaties must be updated to parallel growing developments in tax policy, the international economy, and new treaties or Protocols fulfill this function. While some treaties are “old” and have not been renegotiated, the current travesty is the large number of treaties and Protocols that have been languishing in the U.S. Senate, not even being voted upon, due largely to one U.S. Senator who will not allow them to progress. One example is the treaty with Chile, which is important as the U.S. only has two (2) other treaties with Latin American nations (Mexico and Venezuela). Others material trading partners throughout Europe and Asia are detrimentally impacted, above and beyond U.S. taxpayers that have been pleading for the Senate to, at the very least, vote on the items.

 

This complete standstill in the U.S. Senate also impacts tax planning and has created confusion. As an example, one of our clients was conducting business in a country that had already ratified a Protocol and its internal foreign advisors did not realize the U.S. had not ratified it, leading to a material change in global after tax cash flow.

 

See https://businessroundtable.org/resources/brt-letter-senate-leadership-tax-treaties for a 27 January 2016 letter sent to Senator Mitch McConnell (U.S. Senate Majority Leader) by Business Roundtable, Financial Executives International, Information Technology Industry Council, National Association of Manufacturers, National Foreign Trade Council, Organization for International Investment, Software Finance & Tax Executives Council, Trans-Atlantic Business Council, U.S. Chamber of Commerce and United States Council for International Business.

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