Foreign Tax Treaty
Afghanistan Seeks to Tax U.S. Contractors
As U.S. military involvement in Afghanistan continues, the two countries are discovering limitations and conflicts within their agreed-upon treaties and policy. As the Washington Post reports, one of the most recent involves the taxation of U.S. contractors and subcontractors. While U.S. law and several accords declare U.S.-Afghan assistance as “tax-exempt,” the penurious Afghan government is seeking means to collect on the investment in its borders. The government’s position is that the various accords regulating the foreign presence in Afghanistan, including taxation, do not cover anyone without a direct government contract. According to a recent Finance Ministry letter to primes on the taxation. Read More.
New Zealand-U.S. Income Tax Treaty Enters Second Protocol Into Force
The second protocol to the 1982 New Zealand-U.S. income tax treaty entered into force last month. As Thomson Reuters reports, for most taxes, this will be effective in the U.S. beginning January 1, 2011, and in New Zealand beginning April 1, 2011. Once effective, dividends may qualify for a withholding exemption provided the beneficial owner is a resident company in the other state and has owned 80 percent of the voting interest for more than one year. For companies owning 10 percent of a dividend-paying company, a five percent rate will apply. For all other cases the rate remains 15 percent. For more information, please contact your local international tax professional.
Potential Canadian Tax Refund Opportunity for U.S. LLCs
Prior to the Fifth Protocol amendments to the Canada-U.S. Income Tax Convention (the Treaty), the Canada Revenue Agency (CRA) held the position that a fiscally transparent U.S. limited liability company (LLC) was not entitled to Treaty benefits because the U.S. LLC was not itself liable to tax in the U.S. and, therefore, not a resident of the U.S. for Treaty purposes. This had adverse consequences for fiscally transparent U.S. LLCs, including:
United States and Hungary Sign New Income Tax Treaty
The U.S. Department of the Treasury announced today a new income tax treaty between the United States of America and the Republic of Hungary. In a ceremony held at the Hungarian Ministry of Finance in Budapest, Ambassador Eleni Tsakopoulos Kounalakis and Hungarian Finance Minister Péter Oszkó signed a new tax treaty that brings the existing agreement between the countries signed in 1979, into closer conformity with current U.S. tax treaty policy. The new treaty contains a comprehensive limitation on benefits provision that is consistent with many recently concluded U.S. tax treaties and ensures that only residents of the United States and Hungary may enjoy the benefits of the treaty.
New Quick Reference Guides Added to CB&H International Tax Site
CB&H’s International Tax practice recently added a series of quick reference pdfs that summarize various types of tax treaties and agreements currently in force, awaiting final action, under negotiation, or terminated. You can access each of these pdfs below: Exchange of Tax Information Agreements Estate/Gift Tax Treaties Income Tax Treaties Reciprocal Shipping/Aviation Agreements Social Security Totalization Agreements
Treaty Changes for France Affect a Variety of Tax Issues
A new Franco-German tax treaty should eliminate double taxation on taxpayers when dealing with matters of inheritance and gifts across national borders. The treaty was ratified first by Germany on July 11, 2007, and more recently authorized for ratification by France on February 26, 2009. This new treaty will allow France to tax all transfers of French real estate assets on death or as a gift, as well as as any property (whether movable or real estate) received by a French heir, legatee or donee even when the assets are not located in France. Click here for more information. Meanwhile, a Franco-Danish. Read More.