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Paulson To Host Conference To Discuss US Tax Competitiveness

by Mike Godfrey,, Washington

23 July 2007

It was announced last week that US Treasury Secretary, Henry Paulson will hold a one-day conference on Thursday, July 26 to examine ways in which the current business tax system affects economic growth and US competitiveness in the global economy.

The conference, says the Treasury, represents "a continuation of Secretary Paulson's effort to ensure that American businesses and workers remain competitive in the global marketplace".

According to a schedule for the event published last Thursday, the Plenary Session Panel will discuss issues under the auspices of 'Framing the Issue: Business and economic perspectives'. Panellists will include Oracle CEO, Safra A. Catz, and former Federal Reserve Chairman, Alan Greenspan.

Roundtable discussions will then take place.

The position of the United States in the international tax arena has been an issue very much brought to the fore by the Treasury in recent months.

Last week, speaking before the Senate Committee on Foreign Relations, the US Treasury's International Tax Counsel, John Harrington outlined the Administration's plans for pending income tax agreements.

He told Committee members that:

"I appreciate the opportunity to appear today at this hearing to recommend, on behalf of the Administration, favorable action on four tax agreements that are pending before this Committee. We appreciate the Committee's interest in these agreements and in the US tax treaty network, as demonstrated by the scheduling of this hearing."

"This Administration is dedicated to eliminating unnecessary barriers to cross-border trade and investment. The primary means for eliminating tax barriers to trade and investment are bilateral tax treaties. Tax treaties eliminate barriers by providing greater certainty to taxpayers regarding their potential liability to tax in the foreign jurisdiction; by allocating taxing rights between the two jurisdictions so that the taxpayer is not subject to double taxation; by reducing the risk of excessive taxation that may arise because of high gross-basis withholding taxes; and by ensuring that taxpayers will not be subject to discriminatory taxation in the foreign jurisdiction."

"The international network of over 2,500 bilateral tax treaties has established a stable framework that allows international trade and investment to flourish. The success of this framework is evidenced by the fact that countless cross-border transactions, from an individual's investment in a few shares of a foreign company to a multi-billion dollar purchase of a foreign operating company, take place each year, with only a relatively few disputes regarding the allocation of tax revenues between governments."

"To ensure that our tax treaties cannot be used inappropriately, we continually monitor our existing network of tax treaties to make sure that each treaty continues to serve its intended purposes and is not being exploited for unintended purposes. A tax treaty reflects a balance of benefits that is struck when the treaty is negotiated and that can be affected by future developments. In some cases, changes in law or policy in one or both of the treaty partners may make it possible to increase the benefits provided by the treaty; in these cases, negotiation of a new or revised agreement may be very beneficial."

"In other cases, developments in one or both countries, or international developments more generally, may require a revisiting of the agreement to prevent exploitation and eliminate unintended and inappropriate consequences; in these cases, it may be necessary to modify or even terminate the agreement. Both in setting our overall negotiation priorities and in negotiating individual agreements, our focus is on ensuring that our tax treaty network fulfills its goals of facilitating cross border trade and investment and preventing fiscal evasion."

"The agreements before the Committee today with Belgium, Denmark, Finland, and Germany serve to further the goals of our tax treaty network and improve long-standing treaty relationships. We urge the Committee and the Senate to take prompt and favorable action on all of these agreements."

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