Tax treaty update - JCT explanation of tax treaty with Chile; Foreign Relations Committee hearing set for February 26 

February 24:  The Joint Committee on Taxation (JCT) today released an explanation of the United States-Chile income tax treaty and related Protocol—which, along with several other pending tax treaties, will be the subject of a Senate Foreign Relations hearing scheduled for Wednesday, February 26, 2014.

The United States-Chile income tax treaty was signed in February 2010 and, if ratified, would be the first income tax treaty between the two countries. The United States-Chile income tax treaty also is accompanied by a Protocol and by official understandings implemented by exchanges of diplomatic notes.


The Senate Foreign Relations Committee has scheduled a public hearing on this tax treaty for February 26, 2014.

JCT report

The JCT report—X-10-14 [PDF 223 KB]—includes:


  • A summary of the treaty
  • A brief overview of U.S. tax laws relating to international trade and investment and of U.S. income tax treaties in general
  • A discussion of investment and trade flows between the United States and Chile
  • An article-by-article explanation of the treaty provisions and of the related provisions in the Protocol and diplomatic notes
  • A discussion of issues that members of the Foreign Relations Committee may wish to consider in their treaty deliberations

U.S. ratification process

In the United States, ratification requires the advice and consent of the Senate. A signed tax treaty is first referred to the Senate Foreign Relations Committee for consideration. A public hearing for the tax treaty is typically held.


The Senate Foreign Relations Committee then reports the treaty with a recommendation to the full Senate. The Treaty Clause of the Constitution requires approval by a two-thirds vote, although tax treaties ordinarily are approved by unanimous consent without an actual vote. Following Senate approval, the treaty is referred to the U.S. State Department, where the “Instrument of Ratification” is drafted and forwarded to the president for signature.


A provision in the United States-Chile income tax treaty provides that the United States and Chile will notify each other in writing, through diplomatic channels, when the ratification procedures are completed in each country. The treaty will then enter into force on the date of the later of these notifications.




©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

Share this

Share this

Subscribe

Current and future KPMG clients may subscribe to TaxNewsFlash email alerts.


Email your contact information.

TaxNewsFlash-United States by year