New Anglo-U.S Tax Treaty Signed

by Mike Godfrey, Tax-News.com, Washington

02 April 2003

Representatives from the United States and Britain put pen to paper on Monday to sign a new tax treaty between the two nations.

It is the first update of the bilateral tax arangement for thirty years, and the most significant act of the treaty is to abolish the 5% withholding tax levied on the dividends of UK companies' American subsidiaries. It is thought this will save many British firms millions of dollars a year.

US Treasury Secretary John Snow who signed the agreement on behalf of the United States acknowledged that British firms play a significant role in the US economy, and are responsible for around 1 million jobs in the United States.

Additionally, the Anglo-US treaty simplifies the regulations relating to the taxation of pensions in both countries. A 15% withholding tax on British pension funds' dividend payouts has also been scrapped.

Commenting following the signing of the treaty, Snow explained that the new tax regime will allow "individuals the freedom to move between our two countries for employment and advancement opportunities without fear that such moves will mean adverse tax consequences for their pension benefits."

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