PROGRESS OF THE PROGRAM FOR THE NEGOTIATION O0
  CONVENTIONS FOR THE AVOIDANCE OF DOUBLE
  TAXATION1
Current Economic Developments, Lot 70D467
         Extract From Bulletin No. 242, February 20,1950

SECRET
  INTEREST 'INCREASES IN TAx TREATIES WITH THE UNITED STATES
  Increasing recognition by foreign countries of the role which pri-
vate US capital-can play in their economic development and of the
importance of tax assurances as an inducement to that investment hasg
resulted-in heightened interest by these countries in negotiating tax
conventions with the US. US tax treaties with other governments
are designed to avoid double taxation of income and estates and to
promote administrative cooperation in the assessment and collection
of taxes. We expect to begin tax discussions in March with Uruguay
at the latter's request to consider whether a basis exists for income
and estate tax conventions. Discussions already have been initiated
with Argentina, Brazil, Colombia, Cuba and Mexico. We are also
discussing supplemental treaties with Canada. Colombia has indi-
cated -its eagerness to sign draft treaties on income and estate taxes
as well as the proposed Treaty of Friendship, Commerce and Naviga-
tion. However, since the tax treaties involve a liberalization of our
standard form which would become a precedent for future treaties,
further action 'awaits the determination of a US position thereon.
  Pakistan, Austria and Switzerland have raised informally the pos-
sibility of undertaking tax negotiations with us. Israeli officials too
have indicated interest in such negotiations, and also in the possi-
bility of executive agreements for reciprocal exemption from taxation.
of shipping and aircraft earnings. The initiation of formal negotia-
tions with Australia is still under discussion following informal cor-
respondence between high tax officials of the two countries. Embassy
New Delhi feels that, since the Indian Economic Ambassador at
Large has been impressing on his government the importance of con-
cluding a tax treaty with the US, this might be a good time for us

  I For previous documentation, see Foreign Relations, 1948, vol. I, Part
2, pp.
950 ff.
     688