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August 11, 2023

Report on recent US international tax developments - 11 August 2023

President Biden signed the United States-Taiwan Initiative on 21st-Century Trade First Agreement Implementation Act (H.R. 4004) on 7 August. The legislation stipulates that the United States Trade Representative must send negotiating texts to the relevant congressional committees during trade negotiations, and Congress must approve any trade agreements. This follows on-going dialogue between the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office to enhance economic and commercial ties.

Separately, there are some proposals regarding tax. For example, Senate Finance Committee Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) announced that the Finance Committee will meet in September to mark-up tax legislation to strengthen the US economic relationship with Taiwan. Senator Wyden and Senator Crapo, along with House Ways & Means Committee Chairman Jason Smith (R-MO) and Ranking Member Richard E. Neal (D-MA) on 12 July released a discussion draft of legislation for a US-Taiwan tax agreement. In addition, the Senate Foreign Relations Committee on 13 July approved the Taiwan Tax Agreement Act (S. 1457), which would authorize the President to negotiate and enter into a tax agreement.

Russia on 8 August reportedly suspended certain double tax treaty benefits with countries that Russia designates as "unfriendly states." According to press reports, Russian President Putin signed a decree on 8 August suspending certain provisions in tax treaties with 38 countries, including the United States, Canada, the United Kingdom and Australia. Press reports also indicate that the suspension will remain "until foreign states eliminate the violations they have committed of the legitimate economic and other interests of the Russian Federation, the rights of its citizens and legal entities."

According to an advance unedited draft report dated 8 August 2023, the United Nations (UN) is suggesting alternatives for promoting international tax cooperation. The report discusses existing international and multilateral arrangements, and notes that, while the OECD has "introduced several initiatives to engage and associate non-OECD members with its work … many of those countries find that there are significant barriers to meaningful engagement in agenda-setting and decision making." Consequently, "the substantive rules developed through these OECD initiatives often do not adequately address the needs and priorities of developing countries and/or are beyond their capacities to implement."

To promote cooperation among all countries, the UN "would leverage existing strengths and address gaps and weaknesses in current international tax cooperation efforts." It also proposed three options for furthering international tax cooperation:

  1. A binding multilateral convention that would "set out specific rules creating obligations, including rules that potentially place limits on exercising taxing rights"
  2. A binding framework convention that would "outline the core tenets of future international tax cooperation," including objectives, key principles and a governance structure
  3. A "non-binding multilateral agenda for coordinated actions, at the international, national, regional, and bilateral levels, on improving tax norms and capacity"


For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor


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