The US Internal Revenue Service (IRS) has published guidance for taxpayers regarding whether a tax treaty between the US and a specific country provides a reduced tax rate or possibly a total exemption from US income tax for residents of that country through an early draft update of the new Publication 901 on U.S. Tax Treaties on 9 September 2024.
The key updates include a new tax treaty with Chile, the suspension of the existing treaty with Hungary, and the termination of specific provisions within the tax treaty with Russia.
US-Chile income tax treaty
The US and Chile entered into a tax treaty on 19 December 2023. The treaty is effective for withholding taxes on payments made on or after 1 February 2024 and is effective for tax years beginning on or after 1 January 2024 for any other taxes.
US-Hungary income tax treaty
On 8 July 2022, the US terminated the income tax treaty between the government of the US and Hungary.The termination of the treaty is effective for withholding taxes on payments made on or after 1 January 2024, and is effective for tax years beginning on or after 1 January 2024, for any other taxes.
US-Russia income tax treaty
On 1 July 2024, the US provided formal notice to Russia to confirm the suspension of paragraph 4 of Article 1 and Articles 5-21 and 23 of the income tax treaty between the US and Russia, as well as the accompanying Protocol, by mutual agreement. The suspension of the treaty is effective both for taxes withheld at source and in respect of other taxes on 16 August 2024. The suspension will continue until otherwise decided by the two governments.
