Obama seeks Japan tax treaty action, despite Paul opposition

Reuters News
Posted: Apr 13, 2015 5:12 PM

By Julia Edwards

WASHINGTON (Reuters) - President Barack Obama on Monday urged the U.S. Senate to take action on a tax treaty with Japan, despite Senator Rand Paul's long-standing refusal to allow any Senate action on tax agreements with other countries.

The White House appeal came just two weeks ahead of an official U.S. visit by Japanese Prime Minister Shinzo Abe. Japan is one of the United States' biggest trading partners.

Paul, who announced last week he is seeking the Republican nomination for president in 2016, has blocked every new tax treaty or treaty update since joining the Senate in 2010.

His opposition centers on concerns that foreign governments could too easily access Americans' personal tax information under information-sharing protocols in such treaties.

Before Paul's election, tax treaties were routinely approved by the Senate. The United States has tax treaties with more than 60 countries, ranging from China to Kyrgyzstan. Their main purpose is to prevent double-taxation of corporate profits.

Ratifying the Japan treaty will serve U.S. interests as it reflects the importance of strong economic relations between the two countries, an administration official said.

The White House has proposed updating the existing tax agreement between the United States and Japan, last revised in 2003, to expand information-sharing between the two national tax authorities and to mandate arbitration in cases U.S. and Japanese authorities have been unable to resolve.

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In a letter to the Senate, Obama said the pact was negotiated to bring U.S.-Japan tax treaty relations into closer conformity with current U.S. policy.

Paul was unavailable to comment on the letter.

Major U.S. businesses, including IBM Corp and Fluor Corp, have lobbied the Senate for action on tax treaties, according to Senate lobbying disclosure documents.

Tax treaties with Spain, Luxembourg, Poland, Switzerland, Chile and Hungary also await confirmation.

(Reporting by Julia Edwards; Editing by Kevin Drawbaugh and Dan Grebler)