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. Last Updated: 07/27/2016

Tax Treaty On Course For 1994

The U. S. -Russia double taxation treaty, which will provide some American companies in Russia with tax relief, is likely to take effect on Jan. 1, a U. S. embassy official said Friday.


The official, who asked not to be named, said the treaty documents would be exchanged this month, probably when Vice President Albert Gore Jr. travels to Moscow, so it could become effective.


"The U. S. government considers the treaty to be very important and to provide benefits to not only U. S. businesses in Russia but also Russian businesses in the United States", the official said.


The Moscow Times reported Friday that U. S. Ambassador Thomas Pickering had expressed concerns that the tax treaty could be held up because the United States wanted the tax treaty and a separate bilateral investment treaty to take effect together.


But the embassy official said while that was once the U. S. plan, it no longer thought it possible and so it has decided to enact the tax treaty this month so it could kick in Jan. 1.


The treaty will take effect on the first Jan. 1 after the two sides exchange treaty documents. If the documents are not exchanged this month, the treaty will not become effective until Jan. 1, 1995.


The separate bilateral investment treaty must be approved by the new Russian parliament, which will not meet before Jan. 11.


U. S. businesses are anxious for the tax treaty to take effect because it will for the first time allow them to deduct interest and salary expenses. The deductions apply to companies with 30 percent U. S. investment and at least $100, 000 of capital.


Other countries are said to be negotiating similar treaties with Russia. But if the U. S. treaty does take effect Jan. 1, it will give U. S. companies an advantage over companies from other nations because the other treaties are not as advanced as the American one.