In retaliation for Hungary’s opposition to the global minimum tax agreement sought by the Biden Administration, Treasury terminated a longstanding U.S.-Hungary tax treaty – part of a larger trend of the agency’s failure to appropriately consult Congress regarding global tax negotiations and related issues.
Tax matters fall under the jurisdiction of the House Committee on Ways and Means and Senate Committee on Finance – while trade treaties fall under the jurisdiction of the Senate Foreign Relations committee. Republican leaders on these committees – respectively, Republican Leader Rep. Kevin Brady (R-TX), Sen. Mike Crapo (R-ID), and Sen. Jim Risch (R-Idaho) – today blasted the decision in letters to the U.S. Department of the Treasury and the U.S. Department of State.
From the letter:
“Given the Administration’s stated commitment to strengthen the U.S. tax treaty network, Treasury’s decision to unilaterally withdraw from a longstanding U.S. treaty without any meaningful Congressional consultation is particularly alarming. . . . Treasury’s actions suggest an impulsive attempt to pressure a country that has raised legitimate concerns with the agreement to fall in line.
. . .
“[T]he Administration must view the actions of countries like Russia and Belarus as more offensive than a country’s mere opposition to a global tax agreement that tax administrations and experts have openly questioned and criticized. The Administration’s inconsistent treatment of our current treaty partners further highlights the flaws in Treasury’s stated justification.
. . .
“In its negotiations of the OECD global tax agreement, this Administration has repeatedly overstepped its bounds without appropriate Congressional consultation as part of its “at all costs” approach. However, U.S. tax treaties should not be used as a unilateral, retaliatory tool by an Administration to advance its domestic agenda.
. . .
“We urge the Administration to withdraw its termination of the Treaty and promptly consult with Congress on a bipartisan basis to address any concerns with the Treaty or any other of the United States’ current bilateral tax treaties.”