US Senate Foreign Relations Committee approves eight long-pending tax treaties, Rand Paul not present for the vote

In a surprising development, the US Senate Committee on Foreign Relations on November 10 approved without amendment eight pending US tax treaties and protocols.

Proposed income tax treaties with Chile, Hungary, and Poland; proposed tax protocols with Japan, Luxembourg, Spain, and Switzerland; and a proposed protocol amending the multilateral mutual administrative assistance treaty were sent by the committee to the full Senate with favorable recommendations. Two-thirds of the full Senate must now give their advice and consent to ratification.

The Senate has not approved the ratification of a tax treaty in over five years because committee member and presidential candidate Rand Paul has blocked their progress on account of his opposition to the treaties’ exchange of information provisions.

According to Reuters, Tuesday’s committee vote was by a unanimous voice vote that took place while Paul was not present.

At a Senate Committee on Foreign Relations hearing held October 29 Treasury Deputy Assistant Secretary for International Tax Affairs Robert Stack said the pending protocols with Luxembourg and Switzerland include updated provisions on exchange of tax information. The proposed tax treaties with Hungary and Poland feature new limitation on benefits articles, and the protocol with Japan includes provision obligating tax authorities to assist in the collection of tax.

Stack said that the protocols with Japan and Spain significantly reduce source country taxation of cross-border payments of income and gain and and that the Japanese and Swiss agreements provide for mandatory binding arbitration of tax disputes.

See:

  • Protocol Amending the Convention between the United States of America and the Swiss Confederation for the Avoidance of Double Taxation With Respect to Taxes on Income, Signed at Washington on October 2, 1996, signed at September 23, at Washington, as corrected by an exchange of notes effected November 16, 2010, and a related agreement effected by an exchange of notes on September 23, 2009 (Treaty Doc. 112-1)
  • Protocol Amending the Convention between the Government of the United States of America and the Government of the Grand Duchy of Luxembourg for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, Signed on May 20, 2009 at Luxembourg and a Related Agreement Effected by the Exchange of Notes Also Signed on May 20, 2009 (Treaty Doc. 111-8)
  • Convention between the Government of the United States of America and the Government of the Republic of Hungary for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, Signed on February 4, 2010, at Budapest, and a Related Agreement Effected by an Exchange of Notes on February 4, 2010 (Treaty Doc. 111-7)
  • Convention between the Government of the United States of America and the Government of the Republic of Chile for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, signed in Washington on February 4, 2010, with a Protocol Signed the Same Day, as Corrected by Exchanges of Notes Effected February 25, 2011, and February 10 and 21, 2012, and a Related Agreement Effected By Exchange of Notes on February 4, 2010 (Treaty Doc. 112-8)
  • Protocol Amending the Convention on Mutual Administrative Assistance in Tax Matters, Done at Paris on May 27, 2010 which was signed by the United States on May 27, 2010 (Treaty Doc. 112-5)
  • Protocol Amending the Convention between the United States of America and the Kingdom of Spain for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on Income (Treaty Doc. 113-4)
  • Convention between the United States of America and the Republic of Poland For the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (Treaty Doc. 113-5)
  • The Protocol Amending the Convention between the Government of the United States of America and the Government of Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and a related agreement entered into by an exchange of notes (together the “proposed Protocol”), both signed on January 24, 2013, at Washington, together with correcting notes exchanged March 9 and March 29, 2013 (Treaty Doc. 114-1)

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