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New U.S.-U.K. income tax treaty''s implications for U.S. businesses.

Publication: The Tax Adviser
Publication Date: 01-MAY-02 		Format: Online - approximately 1018 words
Delivery: Immediate Online Access

Article Excerpt
The U.S. and the U.K. signed an income tax treaty on July 24, 2001 that will replace the current treaty signed in 1975. The new treaty will probably come into force for withholding taxes sometime in 2002 and fully into force on Jan. 1, 2003 (subject to ratification). It will be economically significant for both countries.

Dividend-Withholding Taxes

This is the first U.S. income tax treaty that, in certain circumstances, eliminates the dividend-withholding tax. This relief will apply if the dividend recipient is either a pension scheme or a company that has owned at least 80% of the payor for 12 months and it:

* Has owned at least 80% of the corporate payor before Oct. 1, 1998;

* Is a public company (under Article 23, par. 2(c));

* Is entitled to benefits under the derivative-benefits provision (Article 23, par. 3); or

* Is entitled to benefits under the competent-authority determination (Article...

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