Pending U.S. tax treaties.

• Position: Tax Executives Institute

On September 16, 1994, Tax Executives Institute sent the following comments to members of the Senate Committee on Foreign Relations, urging the immediate ratification of several pending bilateral tax treaties. The comments were prepared under the aegis of TEI's International Tax Committee, whose chair is Philip J. Bergquist of Apple Computer, Inc.

President Clinton has forwarded several tax treaties and protocols to the Senate for ratification in respect of the following trading partners of the United States: Canada, France, Kazakhstan, Mexico, Portugal, Sweden, and the Ukraine. Tax Executives Institute urges the Committee on Foreign Relations to schedule a hearing on the treaties and protocols as soon as possible and to recommend ratification by the full Senate before Congress adjourns later this year.

Tax Executives Institute is the principal association of corporate tax executives in North America. Our nearly 5,000 members represent more than 2,500 of the leading corporations in the United States and Canada. A substantial number of TEI members work for companies that engage in international trade and hence will be affected by the five treaties and protocols now pending before the Senate.

The U.S. tax treaty network is an important part of the country's framework for international trade. Bilateral treaties play a critical role in bringing certainty to the global marketplace and safeguarding multinational businesses from the threat of double taxation. TEI has long been concerned that arbitrary tax rules restrict the ability of U.S.-based companies to compete effectively abroad and deter foreign investment in the United States. In a perfect world, tax rules would not drive business decisions, but the world is far from perfect. Thus, tax rules can--and do--affect the decisions of multinational corporations, and the affected governments must respond accordingly.

In our view, the country's economic interests are best served when the international "playing field" is as level as possible. This goal can be advanced by removing tax barriers that impede the flow of goods across borders. Indeed, TEI believes that the principal function of income tax treaties is to facilitate international trade and investment by removing--or preventing the erection of--tax barriers to the free international exchange of goods and services and the unfettered international movement of capital and persons...