The Senate Foreign Relations Committee held hearings on proposed tax treaties and protocols with Canada, Iceland and Bulgaria.
In conjunction with the hearings, the Joint Committee on Taxation released reports on the various treaties, which mainly aim to reduce the possibility of double taxation of income earned by residents of either country. The agreements also focus on ways to prevent tax evasion and avoidance.
The Canadian protocol contains several amendments, including one that addresses companies that are residents of both the U.S. and Canada. The most significant provisions in the Canadian protocol relate to the taxation of cross-border interest, the treatment of income derived through fiscally transparent entities, the taxation of certain provisions of services, and the adoption of mandatory arbitration to facilitate the resolution of disputes between the U.S. and Canadian revenue authorities.
"The proposed protocol also makes a number of changes to reflect changes in U.S. and Canadian law, and to bring the current convention into closer conformity with current U.S. tax treaty policy," said Treasury Department deputy assistant secretary for international tax affairs Michael F. Mundaca in his testimony before the committee.
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