Agreements Key to Maintaining and Enhancing U.S. Economic Competitiveness
Washington, DC - In testimony today before the Senate Foreign Relations Committee, National Foreign Trade Council (NFTC) President Bill Reinsch urged Members of Congress to swiftly ratify Tax Protocols with Germany, Finland and Denmark, and the Tax Treaty and Protocol with Belgium. During his remarks, Reinsch stated:
“As global competition grows ever more intense, it is vital to the health of U.S. enterprises and to their continuing ability to contribute to the U.S. economy that they be free from excessive foreign taxes or double taxation and impediments to the flow of capital that can serve as barriers to full participation in the international marketplace.”
With regard to the protocols under consideration, Reinsch noted that they “improve a convention that has stimulated increased investment, greater transparency, and a stronger economic relationship between our countries.” Reinsch detailed the many benefits of the tax protocols, including provisions allowing for the elimination of the withholding tax on cross-border dividends and enhanced tax treaty arbitration processes, among others.
“If U.S. businesses are going to maintain a competitive position around the world, we need a treaty policy that protects them from multiple or excessive levels of foreign tax on cross-border investments, particularly if their competitors already enjoy that advantage,” said Reinsch.
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 providing the framework for international consensus on important issues like the undesirability of double taxation or the need for reform on dispute settlement procedures, these treaties are the building blocks for increased bilateral trade and investment opportunities.
Outlining the consequences of not ratifying pending protocols, Reinsch noted, “If U.S. enterprises cannot enjoy the reduced foreign withholding rates offered by a tax treaty, noncreditable high levels of foreign withholding tax leave them at a competitive disadvantage relative to traders and investors from other countries that do enjoy the treaty benefits of reduced withholding taxes.”
Reinsch urged Members to reject opposition to single provisions included in the pending agreements, and to instead evaluate the proposals on the basis of their overall intended effect.
“No process that is as laden with competing considerations as the negotiation of a full-scale tax treaty between sovereign states will be able to produce an agreement that will completely satisfy every possible constituency, and no such result should be expected…Agreements should be judged on whether they encourage international flows of trade and investment between the United States and the other country,” he stated.
For a full copy of the testimony, please visit http://nftc.org/newsflash/newsflash.asp?Mode=View&articleid=1878&Category=All