US Senate Ratifies Tax Treaty With UK

by Mike Godfrey, Tax-News.com, Washington

17 March 2003

The Dow Jones news service reported last week that new tax treaties with the United Kingdom, Mexico and Australia were ratified by the US Senate on Thursday.

The negotiation and ratification process has been keenly scrutinised by US-based multinationals, as these treaties will be the first to eliminate withholding tax on dividends received by multinational companies based in one country with subsidiaries in the other.

Although the American business community is keen that the newly ratified agreements should act as templates for future tax treaties, concerns were expressed about this prospect last week, according to Dow Jones. Democrat Senator, Paul Sarbanes, speaking following the approval of the agreements by the Foreign Relations Committee on Wednesday, urged that future treaties be negotiated 'on a case-by-case basis'.

However, the general sentiment surrounding the new format of US tax agreements is good, the news service revealed. Speaking prior to the approval of the treaties, international tax counsel to the Treasury Department, Barbara Angus explained that the agreements will: 'strengthen and expand our economic relations with countries that have been significant economic and political partners for many years.'

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