[Congressional Record (Bound Edition), Volume 150 (2004), Part 18]
[Senate]
[Pages 23999-24001]
[From the U.S. 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 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

[[Page 24000]]

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 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

[[Page 24001]]

     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.

                          ____________________