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The United States Senate approved by a large majority the tax treaty with Chile due to pressure to guarantee access for US companies to lithium, a key mineral for the manufacture of electric vehicle batteries.
The United States approved a tax agreement with Chile, signed by both countries in 2010 and ratified by Chile in 2015, which seeks to eliminate double taxation for US companies and reduce tax barriers to investment, mainly in lithium, a key mineral for the energy transition that Look for the North American nation.
“The Chilean people want to be closer to the United States. (…) And this agreement brings us much closer,” commented the leader of the Democratic majority in the chamber, Chuck Schumer.
Schumer and several senators added that the agreement would allow US companies to access Chile’s significant lithium reserves, which are “key elements needed to make batteries for electric vehicles and solar panels.”
Chile becomes “a critical ally” of all countries that seek to lead the transition to clean energy. The deal will go to the State Department and from there to the signature of US President Joe Biden for ratification.
APPROVED THE DOUBLE TAXATION TREATY BETWEEN CHILE AND THE UNITED STATES.
The Democratic Majority Leader receives Chancellor Van Klaveren in the Senate and invites us to witness the vote. It was approved by 95 -2. pic.twitter.com/tDB0LE2t2O—Juan Gabriel Valdes (@jg_valdes) June 22, 2023
The agreement allows for reduced withholding rates on dividends paid from the United States to Chile, as well as a reduced withholding rate for capital gains tax, applicable in the source country.
“For Chilean taxpayers, the tax burden of a direct investment in the US is reduced by almost 20 points. The agreement ensures the reduction of the withholding tax on dividends from the US from 30% to only 5%. The investment structures used until today should be reviewed and eventually adjusted”, Felipe Espina, EY International Tax partner, told the Chilean newspaper La Tercera.
“The non-double taxation agreement was widely approved by the US Senate after a long processing process, in which AmCham Chile played an essential role, participating in a coalition of companies and different US unions that included the US Chamber of Commerce, the largest trade association in the world with more than three million members,” said AmCham Chile in a statement.
Chile is one of the largest lithium producers. 30% of global production and the largest world reserve located in the Salar de Atacama. The growing demand for electric cars has increased the price of lithium in recent years.
with EFE
