[Congressional Record Volume 150, Number 133 (Thursday, November 18, 2004)]
[Senate]
[Pages S11478-S11480]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROTOCOL AMENDING THE EXISTING TAX CONVENTION WITH THE NETHERLANDS
Mr. LUGAR. Mr. President, I thank my Senate colleagues for passing
the resolution providing advice and consent to the Protocol amending
the existing U.S. Tax Treaty with the Netherlands through the unanimous
consent procedure.
In spite of legislative hurdles that arose during the process, this
Protocol will be enacted, and will bolster the economic relationship
between the United States and a country that is already both a good
friend and a critical
[[Page S11479]]
trade and investment partner. As the United States considers how to
create jobs and maintain economic growth, it is important that we try
to eliminate impediments that prevent our companies from fully
accessing international markets. In the case of taxes, we should work
to ensure that companies pay their fair share while not being unfairly
taxed twice on the same revenue. Tax treaties are intended to prevent
this double taxation so that companies are not inhibited from doing
business overseas.
As the United States moves to keep the economy growing and to
increase U.S. employment, international tax policies that promote
foreign direct investment in the United States such as this Protocol,
are critically important. I have received communications from several
corporate employers. The foreign entities indicate that this Protocol
will provide them with incentives to ``insource'' to the United States.
The domestic companies indicate that this Protocol will provide overall
advantages and benefits. For the benefit of my colleagues, I am
attaching to my statement several of these communications.
I thank my colleagues again for agreeing to pass this important
measure.
Mr. President, I ask unanimous consent the material I made reference
to be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
National Foreign Trade
Council, Inc.,
Washington, DC, October 22, 2004.
Dear Senator: I am writing to express our strong support
for the passage of the Tax Protocol with the Netherlands and
to urge you to enact the agreement this year. Further delay
in the passage of this agreement will subject U.S. companies
to double taxation and adversely affect their global
competitiveness. Foreign trade is fundamental to the economic
growth of U.S. companies. Tax treaties are a crucial
component of the framework that is necessary to allow that
growth.
The National Foreign Trade Council, organized in 1914, is
an association of some 300 U.S. business enterprises engaged
in all aspects of international trade and investment. Our
membership covers the full spectrum of industrial,
commercial, financial, and service activities, and the NFTC
therefore seeks to foster an environment in which U.S.
companies can be dynamic and effective competitors in the
international business arena. To achieve this goal, American
businesses must be able to participate fully in business
activities throughout the world. As global competition grows
ever more intense, it is vital to the health of U.S.
enterprises and to their continuing ability to contribute to
the U.S. economy that they are free from excessive foreign
taxes or double taxation and impediments to the flow of
capital that can serve as barriers to full participation in
the international marketplace.
This is why the NFTC has long supported the expansion and
strengthening of the U.S. tax treaty network. The Senate has
an excellent record in this area; ratifying tax agreements
with Japan, Australia, the United Kingdom, Mexico, Sri Lanka,
and Barbados during this Congress. The NFTC testified in
support of these agreements and of the Netherlands Protocol.
Senator Richard Lugar, Chairman of the Committee on Foreign
Relations, recently sent a Dear Colleague letter encouraging
all Senators to support passage of the Dutch Protocol in the
post-election session. I hope that the full Senate can act
favorably on this agreement in the time that remains in this
session and reaffirm the historic opposition of the U.S. to
double taxation.
Sincerely,
William A. Reinsch,
President.
____
Air Products and Chemicals, Inc.,
Allentown, PA, October 26, 2004.
Re Ratification of the Protocol to the Income Tax Treaty with
the Netherlands.
Hon. Richard G. Lugar,
Chairman, Committee on Foreign Relations, Washington, DC.
Dear Chairman Lugar: On behalf of Air Products and
Chemicals, Inc., I would like to thank you and the Committee
for the prompt consideration and attention that you have
given to the proposed protocol to the income tax treaty with
the Kingdom of the Netherlands. This protocol is very
important to Air Products and the United States economy. It
is very important to us that the Senate ratify the protocol
as soon as possible.
Air Products is a United States company with global
headquarters in Allentown, Pennsylvania. It serves customers
in technology, energy, healthcare and industrial markets
worldwide with a unique portfolio of products, services and
solutions, providing atmospheric gases, process and specialty
gases, performance materials and chemical intermediates. The
company has annual revenues of $7 billion, operations in over
30 countries, and over 18,000 employees.
Air Products has operated in the Netherlands for over
thirty years, and it has substantial operations in the
Netherlands. Air Products also owns some of its other
European operations through the Netherlands. Air Products
generates substantial cash flow from these operations. The
current 5 percent withholding tax rate discourages Air
Products from repatriating this cash back to the U.S. This is
especially true because Air Products is currently in an
excess foreign tax credit position. The proposed protocol
would remove this barrier to repatriating cash. This would
benefit not only Air Products but the U.S. economy as a
whole. The protocol would remove this repatriation barrier
for all U.S. companies with Dutch holdings, and foreign
companies would have a greater incentive to invest in the
U.S. The sooner the Senate ratifies the protocol, the sooner
these benefits will begin.
Accordingly, we respectfully request that the Senate
consider ratification of the proposed protocol as soon as
possible.
If you have any questions regarding Air Products' views on
the proposed protocol, please contact me or Charles Stinner,
our International Tax Director (610-481-2978).
Sincerely,
Kenneth R. Petrini,
Vice President--Tax.
____
Sunoco, Inc.,
Philadelphia, PA, October 26, 2004.
Re Ratification of Protocol to United States-Netherlands
Income Tax Treaty.
Hon. Richard G. Lugar,
Chairman, Senate Foreign Relations Committee, Washington, DC.
Dear Chairman Lugar: On behalf of Sunoco, Inc., I am
writing to urge the prompt ratification of the protocol to
the Netherlands Income Tax Treaty signed on March 8, 2004. As
you are aware, the proposed protocol makes significant
changes to the existing income tax treaty between the United
States and the Netherlands. These changes include the
elimination of source-country withholding on certain
intercompany dividends, modernization of anti-treaty shopping
provisions, coordination of the countries' pension rules and
the provision of clear rules for investments using
partnerships.
The changes negotiated in the protocol are important to the
successful business operations of many companies, including
Sunoco, and a failure to promptly ratify the protocol will
have a detrimental impact on the conduct of business by many
multinational corporations. Moreover, in a report dated
September 30, 2004, the Joint Committee on Taxation estimated
that ratification of the protocol would cause a negligible
change in Federal budget receipts during the fiscal period
2005-2014.
Accordingly, for the reasons stated above, Sunoco believes
that the protocol to the Netherlands Income Tax Treaty should
be promptly ratified, and urges you to support its
ratification.
If you or your staff would like to discuss this issue in
more detail or if we can provide additional information,
please contact the undersigned at (215) 977-6795. Thank you
for your attention to this critical issue.
Sincerely,
Michael J. McGoldrick,
Director, Tax Administration.
____
Mary Kay,
Dallas, TX, October 29, 2004.
Re Dutch tax treaty.
Hon. Richard Lugar,
U.S. Senate,
Hart Senate Office Building, Washington, DC.
Dear Senator Lugar: With the year fast running out, Mary
Kay Inc urges you to ratify the US-Netherlands Tax Treaty.
The new protocol has a zero percent withholding rate on
dividends, which allows our company to repatriate more money
for domestic investment. This increase in funds provides Mary
Kay Inc with the funds to expand its US plant, increase
research and development, which is accomplished in the United
States and hire more US based employees.
Please ask Senator Frist to schedule the treaty as soon as
possible, before time runs out.
Sincerely,
Michael Lunceford,
Senior Vice President.
____
Sun Microsystems, Inc.,
Washington, DC, November 2, 2004.
Senator Richard Lugar,
Chairman, Senate Foreign Relations Committee, Hart Senate
Office Building, Washington, DC.
Dear Chairman Lugar: On behalf of Sun Microsystems, Inc., I
am writing to express our appreciation of your efforts to
seek prompt ratification of the recent Protocol to the U.S.-
Netherlands income tax treaty. We urge that these efforts
continue so that this important new chapter in America's
relationship with the Netherlands can commence before this
year terminates.
As reflected in your Dear Colleague letter of October 20,
2004, your recognition of the importance of prompt
ratification of the Protocol is most welcome. Compared to
other U.S. tax treaties with major trading partners, the
current treaty between the United States and the Netherlands
is antiquated and contains obstacles to the free flow of
trade between the two countries that will be eliminated by
the new Protocol. There will be direct benefits to our
company and to our employees.
Timely and quick action in bringing needed reform this year
to the U.S.-Netherlands
[[Page S11480]]
treaty will help keep the American economy growing.
Sincerely,
Christopher G. Hankin,
Senior Director of Federal Affairs.
____
ABN AMRO Asset Management,
The Netherlands, October 29, 2004.
Chairman Lugar,
U.S. Senate,
Washington, DC.
Dear Chairman Lugar: On behalf of ABN AMRO Bank N.V.,
business unit Asset Management, I am writing to join the many
other members of the U.S. business community that have
expressed their appreciation of your efforts to seek prompt
ratification of the recent Protocol to the income tax treaty
between the United States and the Netherlands.
We urge that these efforts continue so that this important
new chapter in America's relationship with the Netherlands
can commence this year.
As reflected in your letter of October 20, 2004, your
recognition of the importance of prompt ratification of the
Protocol is most welcome. Compared to other U.S. tax treaties
with major trading partners, the current treaty between the
United States and the Netherlands is antiquated and contains
obstacles to the free flow of trade between the two countries
that will be eliminated by the new Protocol.
Treaty advancements reflected in the new Protocol not only
eliminate barriers to trade and investment between the two
countries, but also resolve uncertainties that target abusive
use of the treaty, and promote improved cooperation in
international enforcement. Prompt ratification of the new
Protocol will promote closer ties with one of our
longstanding major trading partners, encourage growth of the
US economy and jobs, and support better international tax
enforcement efforts.
Quick action in bringing this needed reform to the U.S./
Dutch trade relationship will help keep the American economy
growing.
Sincerely,
Maurice Buijnsters,
VP Global Head of Tax.
Richard de Haas,
Senior Tax Officer.
____
ChevronTexaco,
Washington, DC, November 2, 2004.
Re Netherlands Protocol.
Hon. Richard G. Lugar,
Chairman, Committee on Foreign Relations, Dirksen Senate
Office Building, Washington, DC.
Dear Senator Lugar: I am writing to express ChevronTexaco
Corporation's strong support for early ratification of the
Protocol amending the existing tax treaty with the
Netherlands. A strong tax treaty network is critical for U.S.
businesses, such as ChevronTexaco, to compete in the global
marketplace. We appreciate your efforts on tax treaties
generally, and on this Protocol in particular.
We urge the Senate to ratify the Protocol before year end
so that it may enter into force on January 1, 2005. Delaying
ratification until 2005 would delay entry into force until
January 1, 2006 and would delay the important reductions to
withholding tax rates.
I sincerely hope that the Senate will ratify the Protocol
in 2005 and we appreciate your efforts to ensure this.
Sincerely,
Lisa B. Barry,
V.P. and General Manager,
Government Affairs.
____
TimeWarner,
Washington, DC, November 1, 2004.
Hon. Richard Lugar,
Chairman, Committee on Foreign Relations, U.S. Senate,
Dirksen Senate Office Building, Washington, DC.
Dear Mr. Chairman: Thank you for your continuing leadership
in securing quick ratification of several important bilateral
tax treaties this year. Bilateral tax treaties are an
important means for reducing double taxation and eliminating
foreign withholding taxes on our royalties, interest, and
dividends.
In this regard, I want to underscore the importance of
ratifying the U.S.-Netherlands bilateral tax treaty before
Congress adjourns for the year. This treaty, like the
previous ones the Senate has ratified, provides important tax
savings to Time Warner that we will be able to reinvest and
use to expand our business in the United States.
The Netherlands has already ratified this agreement. I
offer our company's full support in helping to urge your
Senate colleagues to agree to quick ratification of this
treaty this year.
Sincerely,
Robert M. Kimmitt.
____
Alliant Energy Corporation,
Madison, WI, November 12, 2004.
Senator Richard Lugar,
Chairman, Senate Foreign Relations Committee, Dirksen Senate
Office Building, Washington, DC.
Dear Chairman Lugar: Thank you for your continuing
leadership in securing quick ratification of several
important bilateral tax treaties this year, Bilateral tax
treaties are an important means for reducing double taxation
and eliminating foreign withholding taxes on our royalties,
interest, and dividends.
In this regard, I write to underscore the importance of
ratifying the U.S.-Netherlands bilateral tax treaty before
Congress adjourns for the year. This treaty, like the
previous ones the Senate has ratified, provides important tax
savings to Alliant Energy that we will be able to reinvest
and use to expand our business in the United States.
The Netherlands has already ratified this agreement. I
offer Alliant Energy's full support in helping to urge your
Senate colleagues to agree to quick ratification of this
treaty this year.
Sincerely,
Erroll B. Davis, Jr.,
Chairman & CEO.
____
American Chemistry Council,
Arlington, VA, November 15, 2004.
Re Ratification of Dutch Tax Treaty.
Hon. Richard G. Lugar,
Senate Office Building,
Washington, DC.
Dear Senator Lugar: The American Chemistry Council urges
ratification of the bilateral tax protocol between the United
States and the Netherlands.
The ACC represents the leading companies engaged in the
business of chemistry. Council members apply the science of
chemistry to make innovative products and services that make
people's lives better, healthier and safer. The business of
chemistry is a $460 billion enterprise and a key element of
the nation's economy. It is the nation's largest exporter,
accounting for ten cents out of every dollar in U.S. exports.
We commend your efforts as Chairman of the Foreign
Relations Committee that resulted in negotiation of the tax
protocol with the Netherlands. The treaty would enhance the
ability of U.S. companies to compete in the important Dutch
market, and if history is a guide, the treaty would create
U.S. jobs within the chemical industry and among our
suppliers and customers, and it would encourage foreign
companies to establish or expand manufacturing facilities in
the U.S. Moreover, the information-sharing provisions of the
treaty would aid the IRS and Treasury Department in
identifying international tax-avoidance schemes that reduce
federal tax receipts and impugn the motives of U.S. companies
whose global operations represent a major element of an
expanding U.S. economy.
Accordingly, we urge ratification of the Dutch Treaty
during the time remaining in the 108th Congress. Timely
ratification would result in early realization of treaty
benefits, and aid companies in capital planning and business
expansion.
Please call if we can answer questions or provide
additional information.
Sincerely,
Charles W. Van Vlack,
Executive Vice President.
____
DuPont Finance,
Wilmington, DE, October 29, 2004.
Hon. Richard G. Lugar,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.
Hon. Joseph R. Biden, Jr.,
Ranking Member, Committee on Foreign Relations, U.S. Senate,
Washington, DC.
Dear Senators: On March 8, 2004, the United States and the
Netherlands signed the Protocol Amending the Convention
Between the United States of America and the Kingdom of the
Netherlands for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with Respect to Taxes on Income.
We at DuPont would urge the Senate to ratify this Protocol
before Congress adjourns.
As you learned during testimony on September 24th, the
Protocol brings the existing Convention, concluded in 1992,
into closer conformity with current U.S. tax treaty policy.
Of particular interest to DuPont, considering the Company's
manufacturing sites in the Netherlands, is the elimination of
withholding taxes on certain types of cross-border direct
dividends. This element of the Protocol creates a powerful
tool for repatriating earnings the Company would then be able
to devote to our priorities in the United States. In
addition, the Protocol's reciprocal treatment of pension
funds for international employment assignees allows DuPont
employees to gain valuable experience through U.S.-
Netherlands exchanges without jeopardizing the status of
their retirement benefits.
DuPont also appreciates the benefits the new Protocol would
offer the U.S. government. Among them, the improved
communications measures between U.S. and Dutch tax
authorities coupled with the assistance in the collection of
taxes; and the modernized Limitation on Benefits article,
designed to deny treaty-shoppers the benefits of the
Convention.
The enhancement of economic ties between the United States
and the Kingdom of the Netherlands in the form of the pending
Protocol will promote the growth of trade and investment
between the two countries to the benefit of both economies.
As such, it is DuPont's hope that deliberations on the
Protocol will be completed this year.
Sincerely,
Marshall G. McClure.
____________________