Hastings International and Comparative Law Review


Nearly fifty years of intermittent negotiations between the United States and Brazil have failed to produce an income tax agreement acceptable to both nations. Negotiations between the two nations have recently been renewed and the possibility of an acceptable bilateral income tax treaty appears promising. However, two difficult issues remain resolved. The first and traditional sticking point is tax sparing. Brazil would like to see the United States offer tax sparing. In addition, the taxation of fees for technical services has recently emerged as a source of disagreement between the two nations.

This Note will (1) argue that a U.S.-Brazil tax treaty is a desirable component of the U.S. tax treaty program; (2) examine the issues that have thwarted efforts toward than end; and (3) consider four approaches to overcoming the current impasse. A U.S.-Brazil tax treaty is significant because it will serve as an important model for future tax treaties with other South American countries, such as Chile and Argentina. Moreover, the treaty will affect millions of taxpayers and billions of dollars of transactions annually.