U.S. Department of the Treasury

(Archived Content)

FROM THE OFFICE OF PUBLIC AFFAIRS

Today Treasury Secretary John Snow and Tony Brenton, Acting Ambassador of the United Kingdom, exchanged instruments of ratification for the new United States – United Kingdom Income Tax Convention.  This exchange of instruments will bring the new tax treaty into force today.  The new tax treaty, which was signed in London in July 2001, replaces the existing tax treaty between the United States and the United Kingdom, which dates back to 1980.

At the ceremony, Treasury Secretary John Snow delivered the following remarks:

I would like to thank you all for being here today and to welcome our friends from the United Kingdom, especially Tony Brenton, the United Kingdom’s Acting Ambassador to the United States.

With this exchange of instruments of ratification, Ambassador Brenton and I have the honor and privilege to bring into force the new income tax treaty between the United States and the United Kingdom.  This new treaty will replace the existing tax treaty between our two countries and will continue our tax treaty relationship which dates back to 1945.  The U.S.-U.K. tax treaty relationship has served well the intended purpose of eliminating tax barriers to cross- border trade and investment.  This new treaty will go even farther to eliminate such barriers and facilitate trade and investment between our two countries.  The new U.S.-U.K. treaty is a clear demonstration of how even strong treaty relationships can be made better.

The tax treaty that we bring into force today is a complete modernization of the existing treaty.  As such, it brings the treaty into greater conformity with U.S. tax treaty policy.  And it reflects the increasing importance of international activity to both our economies.  The high volume of cross-border investment between the United States and the United Kingdom coupled with the degree of similarity in our tax systems make this tax treaty relationship unique in many significant respects.

This new treaty will be the first U.S. treaty that completely eliminates cross-border withholding taxes on dividends paid by subsidiaries to their parents.  This elimination of withholding taxes will help remove one of the remaining barriers to investment between the United States and the United Kingdom.  The new treaty also is notable for the comprehensive rules coordinating the tax treatment of U.S. and U.K. pension plans.  These coordination rules will allow individuals the freedom to move between our two countries for employment and advancement opportunities without fear that such moves will mean adverse tax consequences for their pension benefits.  In sum, the new tax treaty will promote ever-closer economic ties between the United States and the United Kingdom.

Today's exchange of instruments of ratification marks the entry into force of the new tax treaty between the United States and the United Kingdom, yet another important collaboration between our countries.  Thank you, Ambassador Brenton, for your participation in this important endeavor.