US Business Groups Add To Calls For DTA Approvals
In a February 20 letter to US Senate Majority Leader Mitch McConnell (R – Kentucky), the National Foreign Trade Council and other leading business organizations urged action on pending bilateral double taxation agreements (DTAs) and protocols.
A coalition of ten business organizations, including the Business Roundtable, National Association of Manufacturers, the Trans-Atlantic Business Council, the US Chamber of Commerce, and the US Council for International Business, wrote that the pending DTAs and protocols “are important to US economic growth and US trade and tax policy.”
They said: “Many of these agreements were signed by the US Department of Treasury several years ago. The protracted period of ratification could send a signal, inadvertently, to all US tax treaty partners that the US does not value the benefits of tax treaties and that the expansion, improvement, and modernization of the US bilateral tax treaty network is not a priority.”
The organizations stressed that, “given the unilateral actions that many foreign governments are considering as a consequence of issues raised in the OECD Base Erosion and Profit Shifting process, this sends the wrong signal at the wrong time.” They added that the treaties “incorporate reforms that foster robust economic growth and build on long-term investment partnerships between the US and our tax treaty partners.”
For example, the letter pointed out that the proposed DTA with Chile, signed in 2010, “would represent an important milestone in lowering [withholding] tax barriers to US companies operating in Latin America, where the US has few such agreements,” while the proposed DTA with Hungary, also signed in 2010, would modernize the existing treaty and “close a ‘treaty shopping’ loophole in the existing treaty that currently allows non-Hungarian companies to obtain US tax benefits even if their home country does not grant benefits to US companies.”
In addition, the Swiss and Luxembourg protocols, both signed in 2009, would update tax information exchange provisions; the proposed protocol with Spain would lower the withholding tax rates for dividends, interest, and royalties; and the updated DTA with Poland would limit treaty shopping and lower withholding taxes.
