A&M Tax Advisor Weekly
In a noteworthy change of events from recent years, this Summer saw the U.S. Senate approve and the President ratify four income tax treaty amendments (protocols): Luxembourg, Japan, Spain, and Switzerland. These protocols were negotiated several years back but have been held up in the Senate Foreign Relations Committee by Senator Rand Paul from Kentucky for taxpayer privacy concerns since 2011.
There are still treaties pending in the Senate: Poland, Chile, and Hungary. Certain provisions of these treaties (which were negotiated in 2010 and 2013) raise concerns about how such provisions will interact with IRC section 59A, the Base Erosion Anti-Abuse Tax (“BEAT”). As a result, Senator Bob Menendez of New Jersey has stated that the treaties may need to be renegotiated.
The protocols will go into effect once each country submits and receives formal notification of the ratification.