Table 1 provides information on each of the U.S. BTTs that entered into force during our sample period, 1987 to 2007.11 These treaty partner countries account for approximately 23% of total foreign affiliate employment of U.S. MNEs during our sample period.12 Table 1 also reports withholding tax rates on royalty, interest, and dividend income facing U.S. multinational firms just before and just after the relevant BTT entered into force. Note that the withholding rates under the treaty are often substantially lower than they were prior to the treaty. By reducing these withholding rates, BTTs reduce the probability of double taxation, lowering the effective tax rate that multinational firms face and incentivizing offshore activity in treaty countries.

Table 1.

Countries with New Treaties in Effect during Sample Period (1987–2007)

Treaty PartnerYear BTT Entered into ForcePretreaty RatesPosttreaty Rates
DividendsInterestRoyaltiesDividendsInterestRoyalties
India 1990 25 25 30 15 15 20
Indonesia 1990 20 20 20 15 0, 15 10, 15
Spain 1990 25 25 25 10, 15 10 5–10
Tunisia$a$ 1990 – – – – – –
Mexico 1993 15–35 15–35 5–15 10, 15 10
Russia 1993 15 15 20 5, 10
Israel 1994 25 25 25 12.5–25 10, 17.5 10, 15
Portugal 1995 25, 30 20 15 15 10 10
Thailand 1997 10 15 15 10 10, 15 5, 8, 15
Turkey 1997 20, 22 13.2 22 15, 20 15 5, 10
Estonia 1999 26 26 15 0, 5, 15 10 5, 10
Latvia 1999 10 0, 5, 10 5, 15 10 0, 5, 10 2, 5, 10
Lithuania 1999 29 24–29 24–29 15 10 10
Venezuela$b$ 1999 – – – 5, 15 0, 4.95, 10 0, 5, 10
Ukraine 2000 15 0, 15 5, 15 10
Slovenia$a$ 2001 25 – – 5, 15
Sri Lanka 2004 10 15 15 15 10 5, 10
Bangladesh$a$ 2007 – – – – – –
Treaty PartnerYear BTT Entered into ForcePretreaty RatesPosttreaty Rates
DividendsInterestRoyaltiesDividendsInterestRoyalties
India 1990 25 25 30 15 15 20
Indonesia 1990 20 20 20 15 0, 15 10, 15
Spain 1990 25 25 25 10, 15 10 5–10
Tunisia$a$ 1990 – – – – – –
Mexico 1993 15–35 15–35 5–15 10, 15 10
Russia 1993 15 15 20 5, 10
Israel 1994 25 25 25 12.5–25 10, 17.5 10, 15
Portugal 1995 25, 30 20 15 15 10 10
Thailand 1997 10 15 15 10 10, 15 5, 8, 15
Turkey 1997 20, 22 13.2 22 15, 20 15 5, 10
Estonia 1999 26 26 15 0, 5, 15 10 5, 10
Latvia 1999 10 0, 5, 10 5, 15 10 0, 5, 10 2, 5, 10
Lithuania 1999 29 24–29 24–29 15 10 10
Venezuela$b$ 1999 – – – 5, 15 0, 4.95, 10 0, 5, 10
Ukraine 2000 15 0, 15 5, 15 10
Slovenia$a$ 2001 25 – – 5, 15
Sri Lanka 2004 10 15 15 15 10 5, 10
Bangladesh$a$ 2007 – – – – – –

Year BTT entered into force determined from tax treaty text, available from IRS United States Income Tax Treaties—A to Z. Note that Russia had been covered by a preexisting tax treaty between the United States and U.S.S.R., but this treaty did not include standard measures to reduce double taxation, so we count the 1993 treaty with Russia as a new treaty. Tax rates from Price Waterhouse Coopers (PwC) publications, Corporate Taxes: A Worldwide Summary, across various years. When multiple rates apply in different circumstances, each rate or a range is reported. Pre- and posttreaty data are from publications in the following years for each country: India (1990, 1991), Indonesia (1990, 1991), Spain (1990, 1991), Mexico (1993, 1994), Russia (1993, 1994), Israel (1995, 1995), Portugal (1995, 1996), Thailand (1997, 1999–2000), Turkey (1999–2000, 1999–2000), Estonia (1997, 2001–2002), Latvia (1999–2000, 2003–2004), Lithuania (1999–2000, 2001–2002), Venezuela (1999–2000, 2004), Ukraine (1999–2000, 2001–2002), Slovenia (2000–2001, 2004), Sri Lanka (2004, 2005). Note that Israel reports 1995 nontreaty rate for the pretreaty period (doesn't appear in prior issues), and Turkey reports 1991–2000 nontreaty rate for the pretreaty period.

$a$Tunisia and Bangladesh are omitted from the PwC publications, as are Slovenia's pretreaty withholding tax rates for interest and royalties.

$b$Venezuela's pretreaty withholding tax structure is too complex to report with a simple set of rates.

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