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Tax treaty update: Senate Foreign Relations approves four Protocols

U.S. Senate Foreign Relations approves four Protocols

The U.S. Senate Foreign Relations Committee today approved by voice vote the following four pending Protocols to amend income tax treaties with:

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  • Switzerland: A Protocol to amend the income tax treaty with Switzerland—the Protocol was signed in September 2009.
  • Luxembourg: A Protocol to amend the income tax treaty with Luxembourg—the Protocol was signed in May 2009.
  • Spain: A Protocol to amend the income tax treaty with Spain—the Protocol was signed in January 2013.
  • Japan: A Protocol amending the income tax treaty with Japan—the Protocol was signed in January 2013.

Although Senator Rand Paul (R-KY) offered amendments regarding privacy protection, no amendments were adopted by the committee.  

U.S. ratification process

Under the U.S. Constitution, the president has the power to make treaties, by and with the advice and consent of the Senate, provided two thirds of the Senators present concur. 

A signed tax treaty is first referred to the Senate Foreign Relations Committee for consideration. A public hearing for the tax treaty is typically held. The Senate Foreign Relations Committee then reports the treaty with a recommendation to the full Senate.

In recent past Congresses, the Senate Foreign Relations Committee approved and reported the Protocols, as well as treaties with Hungary and Chile. However, approval by the full Senate under unanimous consent motions was blocked by Senator Paul.

What’s next?

The Senate would need to ratify each Protocol before it could take effect. Given the constitutional “two thirds” requirement, at least 67 votes are typically needed for ratification

Senate floor consideration has not yet been scheduled. If any Senator objects to a unanimous consent motion, there could be up to 60 hours of debate on the Senate floor for each Protocol.

The Senate Foreign Relations Committee has not yet scheduled a meeting in the current Congress to consider outstanding tax treaties with Hungary, Poland, and Chile.

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