In June, the American Institute of CPAs (AICPA) urged the United States Senate to approve eight bilateral income tax treaties and protocols that have been long-delayed.
This week, the Senate ratified four international tax treaties with Spain, Switzerland, Japan and Luxembourg. AICPA Vice President of Taxation, Edward Karl, applauded the actions saying, “The AICPA is pleased with the actions taken by the United States Senate yesterday to ratify four important international tax treaties. The AICPA has advocated for the ratification of these treaties for many years and we look forward to continued progress as the Senate works to pass the remaining three treaties. The ratification of these treaties is essential to U.S. taxpayers to provide certainty and important support to the U.S. economy.”
The AICPA wrote in its June letter to the U.S. Senate Committee on Foreign Relations, “[We] believe income tax treaties are vital to United States 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.” As of June 2019, the full Senate had not approved any income tax treaty or protocol since 2010.
According to the AICPA, it’s important that tax treaties be updated to stay current with developments in the global economy. “Outdated tax treaties increase the potential for double taxation as well as hinder the ability of the Internal Revenue Service and foreign tax authorities to cooperate in the fair and efficient enforcement of tax laws,” wrote the AICPA.
The measures passed the Senate with overwhelming support. Currently, three tax-treaties are still awaiting ratification by the Senate, including treaties with Chile, Hungary and Poland.