Tax Convention with Chile
Floor Speech
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Mr. RISCH. I thank the ranking member of the Senate Finance Committee for his work on getting bipartisan agreement on this declaration. This declaration is necessary, given the reservation amending article 23.
The reservation regarding article 23 amends language addressing the scope of double tax relief in connection with income earned by a Chilean subsidiary of a U.S. company. That reservation, which was initiated by the current Treasury Department, calls into question whether article 23 provides sufficient relief for double taxation; specifically, in the case of a U.S. company owning at least 10 percent of a Chilean company, whether the U.S. would provide a credit under the treaty for income taxes paid or accrued to Chile by or on behalf of that U.S. company with respect to earnings that were also subject to U.S. tax under the global intangible low-taxed income, or GILTI, provision enacted in the Tax Cuts and Jobs Act, or TCJA.
Although the Treasury Department did not agree to include a specific clarification in the reservation with respect to that question, the declaration in the resolution confirms that Treasury acknowledges that, in light of TCJA's substantial changes to the international provisions of our Tax Code, additional work is needed to evaluate the policy of article 23 and whether it is sufficient in addressing relief from double taxation. In other words, this declaration helps ensure that outstanding questions regarding the scope of double tax relief provided by article 23 are resolved before similar language is used in future tax treaties.
Ranking Member Crapo, can you discuss why such a clarification is so important with respect to future income tax treaties to which the U.S. is a party?
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Mr. RISCH. I completely agree with the ranking member of the Finance Committee. I will carefully review and consider future U.S. income tax treaties to both ensure we resolve this important issue and to make sure Treasury follows through on its commitment to further address relief from double taxation in our tax treaties. I thank Ranking Member Crapo for his leadership on this issue, and we will continue to work together to hold Treasury to its commitment.
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