The American Institute of CPAs (AICPA) recently urged the United States Senate to approve the eight bilateral income tax treaties and protocols currently pending before it.
“The AICPA believes income tax treaties are vital to United States economic growth as well as U.S. trade and tax policy,” the AICPA wrote in its letter to the U.S. Senate Committee on Foreign Relations. The AICPA noted that the full Senate has not approved any income tax treaty or protocol since 2010.
“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,” the AICPA stated.
“Tax treaties apply to both companies and individuals who are engaged in cross-border transactions,” the AICPA wrote. “As cross-border trade and investment activities expand, tax treaties remain pivotal in preventing the imposition of excessive or inappropriate taxes on foreign trade and investment.”
The AICPA stressed that in order to serve their intended purpose, tax treaties must be updated to stay current with developments in the global economy. “The continued delay of action by the full Senate to ratify these treaties and protocols impedes the ability of the Department of the 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 Outdated tax treaties increase the potential for double taxation as well as hinder the ability of the Internal Revenue Service and foreign tax authorities to cooperate in the fair and efficient enforcement of tax laws,” the AICPA wrote.