2 Treaty Procedure & History
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Procedimiento de aprobación e historia de los CDIs de los Estados Unidos, por la Profesora Allison Christians

Procedimiento de aprobación e historia de los CDIs de los Estados Unidos, por la Profesora Allison Christians

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2 Treaty Procedure & History 2 Treaty Procedure & History Presentation Transcript

  • Topics The U.S. Tax Treaty Network: Past and Present The Model Treaties: Blueprints for Global Tax Coordination Technical Application of Tax Treaties: Taxing Profits Critical Analysis and the Future of Tax Treaties
  • The U.S. Tax Treaty Network: Past and Present How U.S. Tax Treaties are Made Historical Development of the U.S. Tax Treaty Network Current Developments
  • Step 1. Obtain Authority. Treaties are entered into by the Executive Branch under Article II, Section 2, of the U.S. Constitution. [The President] shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur. Compare to Article I, Section 7, which gives the House of Representatives the lead role in domestic revenue matters. “All Bills for raising Revenue shall originate in the House of Representatives.”
  • Step 1, continued Congressional restraint on Executive power to make treaties is exercised by the Senate, traditionally through its Foreign Relations Committee. Most treaties are negotiated on behalf of the United States by the State Department. Tax Treaties are an exception: they are negotiated primarily by the Treasury Department. However, the State Department is traditionally consulted before a treaty is signed.
  • Step 2. Initiate Negotiations. Various sectors of the Treasury Department are involved in negotiating treaties. Primary responsibility is assigned to the Office of International Tax Counsel, a division of the Office of Tax Policy. Staff assistance is traditionally provided by the Internal Revenue Service. The decision about what treaties to initiate or update is not made public. Presumably, there is some form of unstated standard, whether written or unwritten, because U.S. treaty policy has been consistent over several decades.
  • Step 2, continued In connection with new treaties with Japan and Sri Lanka, former ITC Barbara Angus hinted at some of this policy: “In establishing our negotiating priorities, our primary objective is the conclusion of tax treaties or protocols that will provide the greatest economic benefit to the United States and to U.S. taxpayers.” To that end, “We communicate regularly with the U.S. business community, seeking input regarding the areas in which treaty network expansion and improvement efforts should be focused.” [Testimony of Barbara M. Angus, International Tax Counsel, United States Department of the Treasury before the Senate Committee on Foreign Relations on Pending Income Tax Agreements, FEBRUARY 25, 2004]
  • 3. Negotiate. The ITC negotiates the treaty with his or her foreign counterpart This is done in secret, in the sense that there are no public meetings.
  • 4. Initial. • International Tax Counsel initials the treaty to sign off on the negotiations and move the treaty into ratification phase.
  • 5. Submit to President. International Tax Counsel presents the initialed treaty to the President or his delegate for signature. The Dept of State and Treasury prepare a report to the President recommending he transmit the treaty to Senate for advice abd consent to ratification
  • Summary: Delegation of Treaty Negotiation Responsibilities President most treaties tax treaties State Dept Treasury Dept Assistant Sec’y., Tax Policy Congress Office of traditionally International consults Senate Foreign Tax Counsel with Relations Committee negotiates with foreign countries initials the treaty Senate Finance presents to President or his Committee delegate for signature House Ways & Means Committee
  • 6. Sign. If the President approves of the treaty, he signs it.
  • 7. Transmit to Senate. After it is signed by the President, the treaty is forwarded together with the Report to Senate under a letter of transmittal. Senate formally lifts the injunction of secrecy, and the signed treaty become public information.
  • 8. Transmit to Senate Foreign Relations Committee. While the Senate Finance Committee has jurisdiction over tax legislation, jurisdiction over tax treaties lies with the Senate Foreign Relations Committee After receiving the signed treaty and the President’s transmittal letter, the Senate Foreign Relations Committee schedules public hearings A representative of Treasury testifies at the hearing in support of ratification Treasury also generally presents a Technical Explanation of the treaty
  • 9. Obtain Advice and Consent from Senate. “Advice” is not defined, and has been construed to mean that Senate can consent to a treaty with “reservations” with respect to particular provisions Provisions subject to reservation are not enforceable For example, some treaties (e.g. Pakistan) contains a reservation on tax sparing. The Senate must consent to the treaty by a 2/3 vote.
  • 10. Transmit to the President.
  • 11. Prepare and Sign Instruments of Ratification
  • 12. Exchange Instruments of Ratification.
  • Summary: 12 Steps to a Tax Treaty 1. Obtain Authority. 2. Initiate Negotiations. 3. Negotiate 4. Initial 5. Submit to the President 6. Sign 7. Transmit to Senate 8. Transmit to Senate Foreign Relations Committee 9. Obtain Advice and Consent from Senate 10. Transmit to the President 11. Prepare and Sign Instruments of Ratification 12. Exchange Instruments of Ratification
  • That’s a long and complicated process average 5 years to complete often requires protocols simultaneous with entry into force of main agreement, because laws have changed in the interim So, with which countries has the U.S. completed this process?
  • 1935: First Tax Treaty Concluded France
  • Pre-WW II: Addition of Canada (1937) and Sweden (1939) Sweden Canada France
  • 1946 to 1951: After the War, Northern Europe and New Zealand, including Cook Islands Sweden Norway Denmark Ireland U.K. Canada Netherlands Belgium France Switzerland Cook Islands (NZ ext.) New Zealand
  • 1952 to 1957: Random Patterns? Germany Finland Austria Sweden Norway Denmark Ireland U.K. Canada Netherlands Belgium France Switzerland Italy Japan Greece Aruba (NE ext.) Netherlands Antilles Pakistan Honduras (NE ext.) Cook Islands (NZ ext.) South Africa Australia New Zealand
  • 1958-1959: Afro-Caribbean Extensions Germany Finland Austria Sweden Norway Denmark Ireland U.K. Canada Netherlands Belgium France Switzerland Italy Japan All by UK ext.: Cyprus (UK ext) Cayman Islands BVI Greece Jamaica Anguilla Aruba St. Kitts & Nevis Belize (NE ext.) Antigua & Barbuda (UK ext.) Netherlands Antilles Pakistan Honduras (NE ext.) Gambia Montserrat Yemen Dominica Nigeria (UK ext) St. Lucia (UK ext.) Rwanda Sierra Leone (Belg ext.) Barbados (UK ext.) Burundi St. Vincent & the Grenadines Malawi (UK ext.) Grenada Seychelles Trinidad & Tobago Congo Cook Islands (UK ext.) (NZ ext.) (Belg ext.) Zambia (UK ext.) Zimbabwe (UK ext.) South Africa Australia New Zealand Falkland Islands
  • 1960 to 1974: 14 Quiet Years: Only Luxembourg is added in 1964… Germany Finland Austria Sweden Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Italy Japan All by UK ext.: Cyprus (UK ext) Cayman Islands BVI Greece Jamaica Anguilla Aruba St. Kitts & Nevis Belize (NE ext.) Antigua & Barbuda (UK ext.) Honduras Netherlands Antilles Pakistan (NE ext.) Gambia Montserrat Yemen Dominica Nigeria (UK ext) St. Lucia (UK ext.) Rwanda Sierra Leone (Belg ext.) Barbados (UK ext.) Burundi St. Vincent & the Grenadines Malawi (UK ext.) Grenada Seychelles Trinidad & Tobago Congo Cook Islands (UK ext.) (NZ ext.) (Belg ext.) Zambia (UK ext.) Zimbabwe (UK ext.) South Africa Australia New Zealand Falkland Islands
  • …but terminations begin in 1966. Germany Finland Austria Sweden Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Italy Japan All by UK ext.: BVI Greece X Jamaica Anguilla Aruba St. Kitts & Nevis Belize (NE ext.) Antigua & Barbuda (UK ext.) Netherlands Antilles Pakistan X (NE ext.) Gambia X Montserrat Yemen Dominica Nigeria (UK ext) St. Lucia (UK ext.) Rwanda Sierra Leone (Belg ext.) Barbados (UK ext.) Burundi St. Vincent & the Grenadines Malawi (UK ext.) Grenada Seychelles Trinidad & Tobago Congo Cook Islands (UK ext.) (NZ ext.) (Belg ext.) X Zambia (UK ext.) South Africa Australia New Zealand Honduras terminates in 1966. Falkland Islands Termination of UK extensions to Cyprus (1968), Cayman Islands (1969), and Zimbabwe (1974).
  • 1976: Five Additions Poland U.S.S.R. Romania Germany Finland Austria Sweden Iceland Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Italy Japan All by UK ext.: BVI Greece Jamaica Anguilla Aruba St. Kitts & Nevis Belize (NE ext.) Antigua & Barbuda (UK ext.) Netherlands Antilles Pakistan (NE ext.) Gambia Montserrat Yemen Dominica Nigeria (UK ext) St. Lucia (UK ext.) Rwanda Sierra Leone (Belg ext.) Barbados (UK ext.) Burundi St. Vincent & the Grenadines Malawi (UK ext.) Grenada Seychelles Trinidad & Tobago Congo Cook Islands (UK ext.) (NZ ext.) (new treaty) (Belg ext.) Zambia (UK ext.) South Africa Australia New Zealand Falkland Islands
  • 1979: Hungary and Korea added; Nigeria terminates. Poland Hungary U.S.S.R. Romania Germany Finland Austria Sweden Iceland Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Italy Japan All by UK ext.: BVI Greece Jamaica Anguilla Korea Aruba St. Kitts & Nevis Belize (NE ext.) Antigua & Barbuda (UK ext.) Netherlands Antilles Pakistan (NE ext.) Gambia Montserrat X Yemen Dominica (UK ext) St. Lucia Rwanda Sierra Leone (Belg ext.) Barbados (UK ext.) Burundi St. Vincent & the Grenadines Malawi (UK ext.) Grenada Seychelles Trinidad & Tobago Congo Cook Islands (UK ext.) (NZ ext.) (Belg ext.) Zambia (UK ext.) South Africa Australia New Zealand Falkland Islands Nigeria terminates UK extension (1979)
  • Four Additions from 1981-1982 Poland Hungary U.S.S.R. Romania Germany Finland Austria Sweden Iceland Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Italy Japan Malta All by UK ext.: Morocco BVI Greece Jamaica (new treaty) Anguilla Egypt Korea Aruba St. Kitts & Nevis Belize (NE ext.) Antigua & Barbuda (UK ext.) Netherlands Antilles Pakistan Philippines (NE ext.) Gambia Montserrat Yemen Dominica (UK ext) St. Lucia Rwanda Sierra Leone (Belg ext.) Barbados (UK ext.) Burundi St. Vincent & the Grenadines Malawi (UK ext.) Grenada Seychelles Trinidad & Tobago Congo Cook Islands (UK ext.) (NZ ext.) (Belg ext.) Zambia (UK ext.) South Africa Australia New Zealand Falkland Islands
  • 1984: Termination of Extensions Poland Hungary U.S.S.R. Romania Germany Finland Austria Sweden Iceland Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Japan (1) Termination Malta Italy of UK extensions Morocco Greece to Anguilla, Jamaica Egypt Korea Antigua & Barbuda, Aruba Barbados, Belize, X X XX XX(NE ext.) XX Netherlands Antilles X X Pakistan Philippines British Virgin Islands, Dominica, Falkland XX (NE ext.) X Trinidad & Tobago Islands, Gambia, X XX Grenada, Malawi, X Montserrat, Seychelles, XX X Sierra Leone, St. Kitts & Nevis, St. Lucia, St. Vincent (2) Termination X & the Grenadines, Yemen, of Belgium and Zambia; also to Trinidad extensions to & Tobago and Jamaica (but South Africa (3) Termination of New Burundi, Congo, Australia they had independent and Rwanda. Zealand extension to treaties as of 1970 and 1981, New Zealand respectively). X Cook Islands.
  • 1986: Barbados, China, Cyprus Poland Hungary U.S.S.R. Romania Germany Finland Austria Sweden Iceland Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Italy Japan Malta Morocco Cyprus Greece Korea Jamaica Egypt China Aruba (NE ext.) Netherlands Antilles Pakistan Philippines (NE ext.) Barbados Trinidad & Tobago Australia New Zealand
  • 1987: Termination of South Africa Poland Hungary U.S.S.R. Romania Germany Finland Austria Sweden Iceland Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Italy Japan Malta Morocco Cyprus Greece Korea Jamaica Egypt China [Aruba (NE ext.)] [Netherlands Antilles Pakistan Philippines (NE ext.)] Barbados Trinidad & Tobago X Australia New Zealand
  • 1988: Termination of Netherlands extensions, except as to Art. VIII (interest). Poland Hungary U.S.S.R. Romania Germany Finland Austria Sweden Iceland Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Italy Japan Malta Morocco Cyprus Greece Korea Jamaica Egypt China [Aruba (NE ext.)] [Netherlands Antilles Pakistan Philippines (NE ext.)] Barbados Trinidad & Tobago Australia New Zealand
  • 1990: Four additions Poland Hungary U.S.S.R. Romania Germany Finland Austria Sweden Iceland Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Malta Italy Japan Spain Morocco Cyprus Greece Korea Jamaica Egypt China [Aruba Tunisia (NE ext.)] [Netherlands Antilles Pakistan Philippines (NE ext.)] Barbados India Trinidad & Tobago Indonesia Australia New Zealand
  • 1993 to 1995: Six additions, final termination of Netherlands extensions Czech Poland Hungary Slovak Republic Romania Republic Germany Finland Austria Sweden Iceland Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Malta Japan Spain Italy Portugal Morocco Cyprus Greece Korea Jamaica Egypt China Tunisia Israel Mexico XX Barbados Pakistan Philippines Trinidad & Tobago India Armenia Azerbaijan Belarus Estonia Indonesia Georgia Kazakhstan Latvia Lithuania Moldova Russia Tajikstan Turkmenistan Ukraine Australia Uzbekistan New Zealand Final termination of Netherlands extensions to Aruba and the Netherlands Antilles.
  • 1997: Four additions, termination of Malta Czech Poland Hungary Slovak Republic Romania Republic Germany Finland Austria Sweden Iceland Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Japan Spain Italy X Portugal Morocco Cyprus Greece Korea Egypt China Jamaica Tunisia Israel Mexico Pakistan Philippines Barbados Thailand Trinidad & Tobago Turkey India Armenia Azerbaijan Belarus Estonia Indonesia Georgia Kazakhstan Latvia Lithuania Moldova Russia Tajikstan South Africa Turkmenistan Ukraine Australia Uzbekistan New Zealand
  • 1999 to 2001: Six Additions Czech Poland Hungary Slovak Slovenia Republic Romania Republic Germany Finland Austria Sweden Iceland Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Japan Spain Italy Portugal Morocco Cyprus Greece Korea Egypt China Jamaica Tunisia Israel Mexico Venezuela Pakistan Philippines Barbados Thailand Trinidad & Tobago Turkey India Armenia Azerbaijan Belarus Estonia Indonesia Georgia Kazakhstan Latvia Lithuania Moldova Russia Tajikstan South Africa Turkmenistan Ukraine Australia Uzbekistan New Zealand
  • 2004: Sri Lanka Czech Poland Hungary Slovak Slovenia Republic Romania Republic Germany Finland Austria Sweden Iceland Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Japan Spain Italy Portugal Morocco Cyprus Greece Korea Egypt China Jamaica Tunisia Israel Mexico Venezuela Pakistan Philippines Barbados Thailand Trinidad & Tobago Turkey India Armenia Azerbaijan Sri Lanka Belarus Estonia Indonesia Georgia Kazakhstan Latvia Lithuania Moldova Russia Tajikstan South Africa Turkmenistan Ukraine Australia Uzbekistan New Zealand
  • 2005: Bangladesh Czech Poland Hungary Slovak Slovenia Republic Romania Republic Germany Finland Austria Sweden Iceland Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Japan Spain Italy Portugal Morocco Cyprus Greece Korea Egypt China Jamaica Tunisia Israel Mexico Venezuela Pakistan Philippines Barbados Thailand Trinidad & Tobago Turkey India Armenia Azerbaijan Sri Lanka Belarus Bangladesh Estonia Indonesia Georgia Kazakhstan Latvia Lithuania Moldova Russia Tajikstan South Africa Turkmenistan Ukraine Australia Uzbekistan New Zealand
  • 2007 and on: What are our Priorities? Czech Poland Hungary Slovak Slovenia Republic Romania Republic Germany Finland Austria Sweden Iceland Norway Denmark Ireland U.K. Canada Netherlands Belgium Luxembourg France Switzerland Japan Spain Italy Portugal Morocco Cyprus Greece Korea Egypt China Jamaica Tunisia Israel Mexico Venezuela Pakistan Philippines Barbados Thailand Trinidad & Tobago Middle India Turkey East? Armenia Sri Lanka Malaysia? Azerbaijan Libya? Belarus Bangladesh Estonia Indonesia Georgia Brazil? Kazakhstan Latvia Lithuania Moldova Chile? Botswana? Russia Tajikstan South Africa Turkmenistan Ukraine Australia Argentina? Uzbekistan New Zealand