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Paul Could Again Slow Senate Tax Treaty Progress

June 24, 2019, 8:26 PMUpdated: June 24, 2019, 10:26 PM

Senate progress on tax treaties could once again be stalled.

Sen. Rand Paul (R-Ky.) plans to offer amendments this week that could derail Senate efforts to make progress on tax treaties for the first time in nearly a decade. He plans to introduce amendments that limit information-sharing into four protocols amending existing tax treaties, his office said June 24.

“I think we will get significant support,” Paul said. “They are pretty reasonable changes. And so I think we have a good chance of getting some changes that will help protect the privacy of Americans.”

Paul’s amendments would make it harder for both foreign governments and the U.S. to request or share taxpayer information when the tax authority suspects wrongdoing.

Sen. Bob Menendez (D-N.J.), the ranking member of the Senate Foreign Relations Committee, said he planned to vote for Paul’s amendments. If he brings other Democrats with him and a majority of the committee votes to pass the amendments, the ratification process would likely stop before the treaties made it to a full Senate vote, a source with knowledge of the matter said.

Sen. Ben Cardin (D-Md.), also a member of the committee, said some Democrats might support Paul’s amendments, but he wouldn’t.

“If you have a tax treaty, you have to share information. That’s the purpose of a tax treaty,” he said.

Committee Chair Sen. Jim Risch (R-Idaho) said he was “cautiously optimistic” that the treaties would make it through committee without the amendments.

The Senate Foreign Relations Committee plans to consider those protocols June 25, and also has a meeting set for June 26. The protocols amend treaties with Japan, Luxembourg, Spain, and Switzerland.

Tax treaties are signed between countries to help prevent double taxation of companies doing cross-border business. The Senate hasn’t ratified a tax treaty in almost a decade, because of Paul’s objections that information-sharing provisions built into the treaties compromise Americans’ privacy.

(Updated with comments from Cardin, Menendez, Paul, and Risch.)

To contact the reporters on this story: Isabel Gottlieb in Washington at igottlieb@bloombergtax.com; Kaustuv Basu in Washington at kbasu@bloombergtax.com

To contact the editors responsible for this story: Meg Shreve at mshreve@bloombergtax.com; Colleen Murphy at cmurphy@bloombergtax.com