ANCA ASKS TREASURY DEPARTMENT TO REVISIT U.S.-ARMENIA TAX TREATY
Friday, March 29th, 2013
Treasury Secretary Jack Lew
Letter Calls on Secretary Lew to Remove Obstacles to Expanded American
Investment
WASHINGTON-Armenian National Committee of America Chairman Ken
Hachikian asked newly sworn-in Secretary of the Treasury Jacob Lew
this week to revisit the Obama Administration’s past reluctance to
negotiate a new U.S.-Armenia Double Tax Treaty aimed at facilitating
increased bilateral trade and investment.
In a March 27 letter, Hachikian restated the ANCA’s longstanding view
that the 1973 U.S.-U.S.S.R. Tax Treaty is clearly insufficient to the
needs of the present-day U.S. economic relationship with Armenia,
and reaffirmed the organization’s position that a new treaty would
substantially ease potential burdens upon potential investors. “The
present situation’s lack of clarity, resulting, as it does, in
uncertainty, potential costs, and new risks, represents a substantial
deterrent for potential U.S. investors,” explained Hachikian.
“Without an updated Tax Treaty, U.S. businesses will continue to
face significant burdens on investment and cross-border services and
payments, as well as a lack of transparent information exchange and
obstacles to cooperation on tax and related matters.”
Parallel to efforts with the Department of Treasury in support of a
Double Tax Treaty, the ANCA is also working to encourage pro-active
U.S. leadership across a broad array of economy-related platforms,
including the U.S.-Armenia Joint Economic Task Force, and a potential
Trade and Investment Framework Agreement (TIFA), Social Security
Agreement, future trade missions, and business visa relaxation.
Last month, representatives of the Department of State, the Armenian
Embassy, and the Armenian American community shared views and explored
practical paths toward expanded U.S.-Armenia bilateral trade and
investment at a roundtable talk hosted by the ANCA. The town-hall
format meeting, held in the Aramian Conference Room of the ANCA’s
Washington headquarters, included participation by State Department
Director of the Office of Caucasus Affairs and Regional Conflicts
Justin Friedman, ANCA Trade and Investment Policy Specialist Nora
Khanarian, Ph.D., Embassy of the Republic of Armenia Counselor Andranik
Hovhannisyan, Ph.D., and ANCA Executive Director Aram Hamparian. Watch
the complete video from the event.
Read an ANCA Fact Sheet on U.S.-Armenia trade.
The full text of the ANCA letter is provided below.
March 27, 2013
The Honorable Jacob J. Lew Secretary of the Treasury U.S. Department
of the Treasury, Room 3330 1500 Pennsylvania Ave., N.W.
Washington, D.C. 20220
Dear Secretary Lew:
I am writing, on behalf of the Armenian American community, to
congratulate you on becoming our nation’s 76th Secretary of the
Treasury, and to raise with you a matter of considerable concern to all
Americans interested in the growth of U.S.-Armenia economic relations.
As you know, President Obama entered the White House having pledged to
“help foster Armenia’s growth and development through expanded trade
and targeted aid, and by strengthening the commercial, political,
military, developmental, and cultural relationships between the U.S.
and Armenian governments.” We warmly welcomed this commitment and
remain eager to work with the Administration in translating this
promise into policies and programs. We are particularly encouraged
in this regard by Armenia’s strong record of economic reform, and
its partnership with our government on military operations in Iraq,
Kosovo, and Afghanistan.
It is our understanding that, in connection to the annual meeting of
the U.S.-Armenia Joint Economic Task Force held in October of 2012,
the Department of Treasury informed the Republic of Armenia’s Ministry
of Finance of the U.S. government’s view that there is no basis upon
which to consider initiating tax treaty negotiations with Armenia. We
remain troubled by this response and are, today, writing to ask the
Department of Treasury to revisit this matter and move forward, for the
benefit of both nations, on an updated U.S.-Armenia Double Tax Treaty.
The Republic of Armenia has repeatedly asked for a new agreement
to replace the 1973 U.S.-U.S.S.R. Tax Treaty. This outdated,
forty year-old accord, which Yerevan, it would appear, no longer
considers in force, was intended as a limited agreement, even by the
standards of the 1970s, between two hostile superpowers. It is clearly
insufficient to the needs of our present-day economic relationship
with Armenia. The present situation’s lack of clarity, resulting, as
it does, in uncertainty, potential costs, and new risks, represents a
substantial deterrent for potential U.S. investors. Without an updated
Tax Treaty, U.S. businesses will continue to face significant burdens
on investment and cross-border services and payments, as well as a
lack of transparent information exchange and obstacles to cooperation
on tax and related matters.
While we understand that negotiating tax treaties requires time
and other resources, the process of negotiating a treaty between
the U.S.-Armenia treaty should be very straight-forward and would
likely largely follow the U.S. Model Income Tax Convention of 2006,
updated by more recent features of U.S. tax treaty policy such as
provisions for mandatory arbitration. Armenia has broad experience
in negotiating tax treaties – it now has in effect some 34 bilateral
income tax treaties, all negotiated since the dissolution of the
U.S.S.R., including most recently a treaty with the United Kingdom
that largely follows the O.E.C.D. Model Convention. Other Armenian
tax treaties include those with Austria, Belgium, Canada, China,
France, Italy, the Netherlands, Poland, and Russia.
The negotiation of an updated Double Tax Treaty is urgently needed and
long-overdue to create a clear framework for investors and individuals
that have business activities in both jurisdictions. Just as the U.S.
has negotiated tax treaties with Estonia, Slovenia, Lithuania, and
Malta, a treaty with Armenia would bring material benefits in terms
of our economic relations with a friendly emerging market.
We appreciate your attention to our concerns and would welcome the
opportunity to continue our dialogue with the Department by meeting
with you to discuss this matter in greater detail.
Sincerely, [signed] Kenneth V. Hachikian Chairman
cc: Members of the U.S. Congress
From: A. Papazian