Thursday, November 18, 2004
U.S. Senate Foreign Relations Committee Chairman Dick Lugar announced that the U.S. Senate has approved the Protocol amending the existing Tax Treaty with the Netherlands. The treaty was passed by unanimous consent Wednesday night, in spite of repeated legislative hurdles since the committee's hearing held on September 24.
"This Protocol will bolster the economic relationships between the United States and a country that is already a good friend and critical trade and investment partner," said Lugar (R-IN). "As the United States considers how to create jobs and maintain economic growth, it is important that we try to eliminate impediments that prevent our companies from fully accessing international markets. These impediments may come in the form of regulatory barriers, taxes, tariffs, or unfair treatment. In the case of taxes, we should work to ensure that companies pay their fair share, while not being unfairly taxed twice on the same revenue. Tax treaties are intended to prevent double taxation so that companies are not inhibited from doing business overseas.
"As the U.S. moves to keep the economy growing and to increase U.S. employment, international tax policies that promote foreign direct investment in the U.S., such as this Protocol, are critically important. The Netherlands is the third largest investor in the U.S., having invested $155 billion in the U.S. in 2002. The Netherlands is a significant importer of U.S. goods and services with imports of $18.3 billion in 2002.
"For example, my home state of Indiana exported $106,100,952 to the Netherlands in the second quarter of 2004, making it the 7th largest destination for Hoosier exports," Lugar continued.
"This Protocol will send a positive message to keep growing the investment in the U.S. The Organization for International Investment, comprised of U.S. subsidiaries of foreign headquartered companies, or those that "insource" to the U.S., indicates this will significantly encourage its members to expand their U.S. operations contributing to domestic growth and creating jobs here in the U.S.
"As Chairman of the Senate Foreign Relations Committee, I am committed to moving tax treaties as expeditiously as possible. Last year, the Committee and the full Senate approved treaties with Mexico, Australia and the United Kingdom. Earlier this year, we finalized treaties with Japan and Sri Lanka. I encourage the Bush Administration to continue its successful pursuit of treaties that strengthen the American economy by providing incentives for foreign companies to expand their operations in the U.S. I will continue to do my part to see that these agreements receive the advice and consent of the Senate for enactment on a timely basis."
Since assuming the chairmanship in 2002, Lugar has guided the passage of six tax treaties through the Senate Foreign Relations Committee and United States Senate including the historic U.S.-Japan Tax Treaty. In order to encourage timely passage of the treaty so that benefits would be realized to American companies already this year, Lugar wrote the Japanese Finance Minister and leaders of the Diet. U.S. Ambassador Howard Baker and Japan's Senior Vice Minister Aisawa of the Ministry of Foreign Affairs signed the Tax Treaty and then exchanged instruments of ratification, on March 30, a day before the deadline. Japan is the fourth largest source of imports to the U.S. and the third largest export market for U.S. goods.