Washington, DC – The National Foreign Trade Council (NFTC) today released a statement applauding the U.S. Senate for ratifying tax treaties with Germany and Belgium before adjourning for the year.
“We commend the Senate for removing previous holds on the treaties and ratifying them, allowing for expeditious implementation of reforms included in the new protocols,” said NFTC President Bill Reinsch. “Both treaties will enhance economic development and investment ties with Germany and Belgium, and lead to greater transparency between our countries. We thank the Senate leadership for making the treaties a high priority during this legislative session.”
The NFTC has long been an advocate for the expansion and strengthening of the U.S. tax treaty network as a means to ensure the continued global competitiveness of U.S. companies. “By eliminating excessive foreign taxes, double taxation and other impediments to the flow of capital, these tax treaties are vital to ensuring U.S. companies’ ability to compete on a level playing field with foreign competitors,” said Reinsch.
The NFTC supports reform of U.S. treaty policies to allow for a zero withholding rate on related-entity dividends, and these treaties move closer to that goal. Both the German and Belgian tax protocols lower the ownership threshold required to receive the benefit of the zero dividend withholding rate from 100 to 80 percent.
The treaties also include enhanced tax treaty arbitration processes. For example, the German Protocol provides for mandatory arbitration of certain cases that cannot be resolved by the “competent authorities” within a specified period of time, a provision that is the first of its kind in a U.S. tax treaty.
“The NFTC is hopeful that the Treasury Department will send the Canadian Tax Protocol to the Senate early next year. Upon receiving the proposal, we encourage Members to review and ratify it swiftly so that the United States can reap the economic benefits that many competitor nations already enjoy,” Reinsch concluded.
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