The US Senate overwhelmingly approved Thursday a fiscal pact that Chile has been seeking for a long time, ending an odyssey of more than a decade to get the treaty sealed.
Lawmakers voted 95-2 to ratify the tax treaty, completing a push by Democratic leaders who oversee the implementation of green energy credits approved in last year’s tax and environmental bill. Chile is one of the largest lithium producers in the world, a building block in batteries and other technologies crucial to moving away from reliance on oil and gas.
“A tax agreement with Chile eliminates double taxation, provides certainty and is a natural counterpart to our free trade agreement with Chile,” said Jim RischRanking Member of Foreign Relations Senate (R-Idaho).
The United States has tax treaties with dozens of countries. those agreements help businesses avoid paying tax twice on the same income and encourage cross-border investment. The treaties also contain frameworks that governments and companies can use to resolve disputes and provide lower withholding rates.
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Business groups such as the National Council for Foreign Trade praised the Senate measure, saying it would go a long way toward strengthening the economic relationship between the US and Chile. “Chile is a vital partner of the US in Latin America, and this treaty will allow US companies to avoid double taxation, which currently can be as high as 44%,” said Anne Gordon, vice president for International Tax Policy at the Council.
The treaty now returns to Chile for approval by its Congress. If it comes into force, it would be the second country in South America (the first being Venezuela) with a tax agreement with the US, according to the US Internal Revenue Service.