TEI comments on Dutch treaty protocol: July 8, 2004.

On July 8, 2004, TEI President Raymond G. Rossi sent the following letter to Senator Richard G. Lugar, Chairman of the Senate Foreign Relations Committee, concerning the ratification of the proposed protocol amending the income tax treaty with the Netherlands. The letter was prepared under the aegis of TEI's International Tax Committee, whose chair is Bruce R. Maggin of IBM Corporation. Materially contributing to the development of the letter were John K. DeShong of Edison Mission Energy and Janice L. Lucchesi of Akzo Nobel Inc.

On March 8, 2004, the United States and the Netherlands signed a protocol (the "New Protocol") to the Convention Between the United States of America and the Kingdom of the Netherlands for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, revising the existing, 12-year old agreement. On behalf of Tax Executives Institute, I submit the following comments on the New Protocol, which TEI urges the Senate to ratify this year before adjournment.

Background

Tax Executives Institute is the preeminent association of business tax executives. The Institute's 5,400 professionals manage the tax affairs of 2,800 of the leading companies in Canada, the United States, and Europe and must contend daily with the planning and compliance aspects of business tax laws in the United States as well as in other jurisdictions. TEI's membership includes representatives from most major industries including manufacturing, distributing, wholesaling and retailing, real estate, transportation, financial services, telecommunications, and natural resources.

TEI is concerned with issues of tax policy and administration and is dedicated to working with government agencies to reduce the costs and burdens of tax compliance and administration to our common benefit. We are convinced that the administration of the tax laws in accordance with the highest standards of professional competence and integrity, as well as an atmosphere of mutual trust and confidence between business and government, will promote the efficient and equitable operation of the tax system. In furtherance of this principle, TEI supports efforts to improve the tax laws and their administration at all levels of government.

The New Protocol

A fundamental purpose of bilateral income tax treaties is to eliminate double taxation of income earned by residents of either country from sources within the other country. Double taxation...