The U.S. officially entered into tax treaty protocols with Japan on August 30. The tax treaty between the U.S. and Spain is scheduled to enter into force on November 27, 2019.

After a near decade-long delay, the Senate overwhelmingly ratified protocols amending the U.S. tax treaty with Japan and approved updates to the U.S. tax treaty with Spain.

"These tax treaty protocols will help to create a level playing field for American businesses and workers, and foster stronger economic growth for both the United States and our trading partners," Treasury Secretary Steven Mnuchin said in a recent Treasury press release. "We are pleased to continue working with members of the U.S. Senate from both parties to achieve strong, bipartisan approval of modernized tax treaties and protocols to encourage investment and job growth in America."

Japan Protocol

The Japan Protocol is expected to significantly reduce taxes on interest and certain dividends, according to Treasury. Further, the Japan Protocol will provide for mandatory binding arbitration to facilitate more effective resolutions of certain tax disputes between U.S. and Japanese tax administrations as well as taxpayer certainty, the department noted.

Spain Protocol

Additionally, the Spain Protocol is expected to significantly reduce taxes on interest, royalties, certain direct dividends, and capital gains, according to Treasury. Further, it, too, will provide for mandatory binding arbitration to streamline dispute resolutions between the two countries’ tax administrations.

The tax treaties have largely received bipartisan support among lawmakers on Capitol Hill. "These tax treaties account for trillions of dollars in foreign investments across the country, cultivate robust trading relationships, and create certainty for job creators," Senate Majority Leader Mitch McConnell, R-Ky., said.

Source: CCH Tracker News