Editorial Note

At the Ninth International Conference of American States held at Bogotá in 1948, certain of the governments proposed that the American republics become parties to a multilateral treaty providing that income be taxed only by the government of the country in which the income was produced. The United States opposed this principle and obtained adoption, instead, of a resolution that each American state should, within the framework of its own institutions, seek to liberalize its tax laws so as progressively to reduce or eliminate double taxation on income from foreign sources and to avoid unduly burdensome and discriminatory taxation without, however, creating international means for tax avoidance. The states also agreed to seek conclusion as soon as possible of agreements to prevent double taxation.

A treaty with Colombia for the avoidance of double taxation was signed ad referendum at Bogotá in November 1949, following detailed negotiations. It contained tax incentive provisions which would have eased United States income tax charges on the profits earned in Colombia by United States companies. Such preferences were opposed, however, at high levels in the United States Department of the Treasury. As a result this treaty was not presented to Congress.

Brazil requested a double taxation treaty, but it was known that Brazil desired even more liberal tax incentives than were provided in the Colombian draft. The Brazilian concept involved a virtual return to the pre-Bogotá positions, in that United States capital invested in Brazil would be subject to income tax charges only at the source of profit.

In the two years or so following the Bogotá Conference, discussions had been begun or were contemplated also with Argentina, Cuba, Ecuador, Mexico, Uruguay, and Venezuela, but after the Treasury Department withheld approval of the Colombian treaty, the Department of State felt that until that Department decided what type of concessions it would approve, no further negotiations should be held with any other American republic. An impasse developed, therefore, and the program of concluding treaties for the avoidance of double taxation with underdeveloped countries went into abeyance at the end of 1950. A limited agreement was signed with Argentina, however, on July 20, which provided for the avoidance of double taxation on earnings derived from the operation of ships and aircraft (see footnote 2, page 689).

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For further information on this subject, see Ninth International Conference of American States, Bogotá, Colombia, March 30–May 2, 1948: Report of the Delegation of the United States of America, With Related Documents (Department of State Publication 3263). Relevant documentation is in the Department’s decimal file 611.**92 (substitute appropriate country number) and the issues of the Department of State classified weekly bulletin, Current Economic Developments, 1950, in Lot File 70D467, Box 19850.