[Congressional Record Volume 140, Number 131 (Monday, September 19, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 19, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
           SECOND PROTOCOL TO THE TAX CONVENTION WITH ISRAEL

  Mr. SARBANES. Mr. President, on November 18, 1993, the Foreign 
Relations Committee ordered favorably reported the second protocol 
amending the 1975 United States-Israel income tax convention. At that 
time, the committee was informed by the Treasury Department that one 
technical issue remained to be resolved with respect to the protocol. 
Therefore, at the Treasury Department's request the committee 
recommended that the matter of giving final advice and consent to the 
ratification of the proposed protocol not be taken up by the Senate as 
a whole until such time as the outstanding issue was satisfactorily 
resolved.
  I am pleased to announce that on September 13, 1994, I received from 
the Treasury Department a letter indicating that they had received from 
Israel the written assurances they were seeking, and that they were 
therefore ready to recommend prompt action by the full Senate. Without 
objection, I would ask that the text of that letter be reprinted in the 
Record:
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                   Department of the Treasury,

                                   Washington, September 12, 1994.
     Hon. Paul S. Sarbanes,
     U.S. Senate, Washington, DC.
       Dear Senator Sarbanes: The Foreign Relations Committee held 
     hearings on October 27, 1993 on a number of income tax 
     treaties, including a Protocol to the pending treaty with 
     Israel. As you will recall, shortly after those hearings I 
     advised you, in a letter of November 18, 1993, that we were 
     awaiting Israeli confirmation as to the adequacy of certain 
     aspects of their information exchange practices under tax 
     treaties. We suggested that Senate approval of the Protocol 
     be delayed until we had received the assurances that we were 
     seeking from the Israeli tax authorities. Your Committee did, 
     in fact, recommend approval of the Protocol, but asked the 
     Senate to hold up its consideration, as we had requested. I 
     am pleased to report to you now that we have received the 
     written assurances that information, including bank 
     information, would be made available by the Israeli tax 
     authorities to the Internal Revenue Service in appropriate 
     circumstances.
       We would like to see Senate action taken on the Protocol as 
     soon as possible so that instruments of ratification both for 
     the Protocol considered by your Committee last year, as well 
     as for the treaty and first Protocol which have not yet gone 
     into force, can be exchanged prior to the end of November. 
     The entry into force provisions of the treaty, as they will 
     be amended by the pending Protocol, specify that the treaty 
     will have effect, for other than withholding taxes, as of 
     January 1 of the year following entry into force if the 
     treaty enters into force after June 30 of a year. Entry into 
     force will take place 30 days after the exchange of 
     instruments of ratification. If, therefore, Senate advice and 
     consent is given in sufficient time to permit exchange 
     instruments before the end of November, the treaty, as 
     amended by the Protocols, will enter into force this year, 
     and can take effect as of January 1, 1995.
       Thank you for your cooperation on this matter. I hope that 
     the Senate will be able to act quickly on this Protocol.
           Sincerely,
                                                Leslie B. Samuels,
                                 Assistant Secretary (Tax Policy).

  Mr. SARBANES. Mr. President, I would like to note that the United 
States-Israel income tax treaty, which was signed in 1975 and 
subsequently amended by a 1980 protocol, has not yet gone into force. 
Although the Senate gave its advice and consent to ratification of the 
treaty, as amended by the first protocol, on November 18, 1981, that 
consent was made subject to an understanding providing for 
congressional access to information exchanged under the treaty. The 
proposed second protocol would modify the treaty to satisfy that 
understanding. Thus once the Senate gives its advice and consent to 
ratification of the pending second protocol, the instruments of 
ratification of treaty can be exchanged and implementation can begin. I 
believe this is an important and valuable treaty, and I would urge that 
the Senate move quickly to approve this protocol so that the entire 
agreement can finally be put into effect.

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