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Senate Committee Approves U.S.-Chile Tax Treaty

US-Chile

A U.S. Senate committee has approved a bilateral tax treaty between the U.S. and Chile, an agreement deemed essential to keeping American taxpayers competitive in the South American country.

The Senate Foreign Relations Committee has approved a bilateral tax treaty between the U.S. and Chile.

The treaty is not official yet and now heads to the Senate for a vote; the Senate must give its advice and consent to ratification with a two-thirds majority vote. Once the Senate takes action to approve the Treaty, which is not yet scheduled, the President must sign the instruments of ratification to complete the approval and ratification process.

“I expect this legislation will receive broad, bipartisan support in the full Senate,” said Sen. Jim Risch (R-Idaho), ranking member of the Committee.

The Committee vote was 20-1, the only dissenting vote that of Sen. Rand Paul (R-Ky.). He proposed an amendment, which was defeated, that would have added more requirements the U.S. would have to meet to collect the bank records of American citizens in Chile. (Paul has often contested treaty proposals because of privacy concerns.)

The Senate does not ratify treaties but instead gives its advice and consent, empowering the president to proceed with ratification.

“Chile is one of our strongest democratic partners in the Americas, and this treaty will help protect and grow U.S. foreign direct investment, facilitate U.S. economic engagement in the region and strengthen the hand of U.S. companies operating in Chile,” said U.S. Senator Bob Menendez (D-N.J.), chairman of the Committee.

The U.S. Chamber of Commerce reportedly said in a letter supporting the ratification that U.S. companies face an aggregate effective tax rate of up to 44.45% and that companies headquartered in countries with a tax treaty in effect with Chile benefit from much lower rates.”

The Committee considered this treaty three times before, including in the last Congress. Foreign influence may have played a part this time.

“China has entered into a tax treaty with Chile, and Chinese companies are taking advantage,” Menendez added. “They are investing in Chilean companies and expanding their position in Chile’s markets and economy. We need to level the playing field.”

Chile, which ratified the treaty eight years ago, is also the world’s second-largest producer of lithium, after Australia.

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About the Author 

Alicea Castellanos is the CEO and Founder of Global Taxes LLC. Alicea provides personalized U.S. tax advisory and compliance services to high net worth families and their advisors. Alicea has more than 17 years of experience. Prior to forming Global Taxes, Alicea founded and oversaw operations at a boutique tax firm, worked at a prestigious global law firm and CPA firm. Alicea specializes in U.S. tax planning and compliance for non-U.S. families with global wealth and asset protection structures which include non-U.S. trusts, estates and foundations that have a U.S. connection.

Alicea also specializes in foreign investment in U.S. real estate property, and other U.S. assets, pre-immigration tax planning, U.S. expatriation matters, U.S. persons in receipt of foreign gifts and inheritances, foreign accounts and assets compliance, offshore voluntary disclosures/tax amnesties, FATCA registration, and foreign companies wanting to do business in the U.S. Alicea is fluent in Spanish and has a working knowledge of Portuguese.

Alicea is an active member of the Society of Trusts & Estates Practitioners (STEP), the New York State Society of Certified Public Accountants (NYSSCPAs), the American Institute of Certified Public Accountants (AICPA), the International Fiscal Association (IFA), a member of Clarkson Hyde Global, a world-wide association of accountants, auditors, tax specialists and business advisors and the Global Referral Network (GRN).

Distinctly, in 2020, Alicea was awarded with a prestigious NYSSCPA Forty Under 40 Award. She was selected as someone that has notable skills and is visibly making a difference in the accounting profession. Alicea has also been recognized as a leading expert for Tax advice and she has been invited to join Advisory Excellence, as their exclusively recommended tax expert in the USA.

In 2021 and 2022, Alicea was the Gold and Silver Winner, respectively, of Citywealth’s Powerwomen Awards in the category USA – Woman of the Year – Business Growth (Boutique). In 2023, she continued her winning streak by receiving the Gold award for Company of the Year Female Leadership (Boutique). Furthermore, Alicea is currently listed in the Global Elite Directory 2023, which is an annual exclusive directory of the world’s elite lawyers and outstanding wealth advisors advising ultra-high net-worth clients.

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