The American Institute of CPAs (AICPA) has urged the United States Senate to promptly consider and approve the bilateral income tax treaties and protocols currently pending before it.
In the March 1 letter to the Chairman and Ranking Minority Member of the Senate Foreign Relations Committee, Annette Nellen, CPA, CGMA, Esq., chair of the AICPA Tax Executive Committee, wrote, “The AICPA believes income tax treaties are vital to United States (U.S.) economic growth as well as U.S. trade and tax policy. Tax treaties assist in harmonizing the tax systems of treaty nations and in providing certainty on key issues faced by businesses of all sizes that operate internationally. Tax treaties are also important tools used to promote a competitive environment to attract foreign investment into the U.S.”
Nellen noted that the full Senate has not approved an income tax treaty or protocol since 2010 and stated that tax treaties, which apply to both companies and individuals who are engaged in cross-border transactions, remain “pivotal in preventing the imposition of excessive or inappropriate taxes on foreign trade and investment.”
“In order to serve their intended purpose, tax treaties require updating to stay current with developments in the global economy,” Nellen wrote. “The lack of action by the full Senate to ratify these treaties and protocols impedes the ability of Treasury to keep U.S. tax treaties in line with changes in policy and bilateral relationships. Outdated tax treaties increase the potential for double taxation as well as hinder the ability of the Internal Revenue Service (IRS) and foreign tax authorities to cooperate in the fair and efficient enforcement of tax laws,” she stated.
The letter identified six protocols and income tax treaties awaiting Senate approval as illustrative examples of the benefits that would be provided by ratification.