April 6, 2016

Dear Member of the United States Senate:

Seven bilateral income tax treaties and protocols are currently pending before the Senate. These treaties and protocols would provide enhanced protection from double taxation for American businesses competing in global markets and would remove additional tax burdens imposed by foreign governments. All seven bilateral agreements have been previously approved by the Senate Foreign Relations Committee (some on more than one occasion), while Senate approval of several of these agreements has been pending for over five years. Business Roundtable urges the Senate to approve these treaties and protocols in an expeditious manner.

Increasing the ability of American businesses and their U.S. workers to compete in foreign markets provides immediate benefits to the U.S. economy. Based on the most recent data, U.S. companies with foreign affiliates directly employed 23.3 million U.S. workers in 2013. Including the impacts through their supply chains and the spending of their employees, in 2013, these globally engaged U.S. companies supported 76.6 million U.S. jobs, $4.7 trillion in U.S. labor income, and $8.3 trillion in U.S. GDP – accounting for almost half of all private sector employment and 57 percent of private sector GDP.

Senate approval of the seven pending bilateral income tax treaties and protocols would lower tax barriers and coordinate tax administration with Chile, Hungary, Japan, Luxembourg, Poland, Spain, and Switzerland. For example, the proposed tax treaty with Chile – the first such treaty between these two countries – would reduce the corporate tax rate for U.S. companies in Chile similar to companies headquartered in other countries with which Chile has a tax treaty. Until this treaty is ratified, U.S. companies remain subject to a higher Chilean tax rate. In essence, ratification of the Chilean treaty would be a cost-free tax reduction for U.S. companies doing business there. Similarly, the proposed protocol with Spain would amend an existing treaty to lower Spain’s withholding taxes on dividends, interest, and royalties. In addition, the proposed protocols with Japan, Spain, and Switzerland would provide for mandatory arbitration procedures to assist in dispute resolution.

Action on these pending treaties and protocols would extend important protections to U.S. businesses and strengthen the U.S. economy by supporting jobs and growth through reductions in foreign taxes that hinder the ability of U.S. businesses to compete on a level playing field in global markets.

Business Roundtable offers its assistance to you and looks forward to working with the Senate on approval of these measures.

Sincerely,

Mark A. Weinberger Global Chairman and CEO EY
Chair, Tax and Fiscal Policy Committee Business Roundtable

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