Senate ratifies US-Chile tax treaty, securing American lithium access.

A Landmark Decision: U.S.-Chile Tax Treaty Ratified

On June 22, the Senate made history with a landslide final vote in favor of ratifying the critical U.S.-Chile tax treaty. This momentous decision, with a resounding 95-2 majority, came after years of negotiations and legislative hurdles.

The U.S.-Chile tax treaty, in the works since 2010, holds immense significance for American companies operating in Chile. Without this treaty, existing mining operations would face a staggering 47 percent tax rate, jeopardizing their financial stability and access to the country’s abundant lithium and copper reserves.

Initially, the treaty faced opposition led by Sen. Rand Paul (R-Ky.), who raised concerns about potential information security risks for U.S. citizens. However, after revisions and deliberations, the final round of voting saw only two dissenting votes, with Sen. Paul and Sen. Josh Hawley (R-Mo.) opposing the treaty.

Once President Joe Biden ratifies the treaty, Chile will become the third Latin American nation to have a double tax treaty with the United States, joining a select group of countries that promote economic cooperation and competitiveness.

Benefits and Boosts

The approval of the U.S.-Chile tax treaty by the Chilean Congress in 2015 brings numerous advantages for both nations. It fosters increased investment, reduces withholding tax rates on interest payments and royalties, and significantly lowers the Chilean capital gains tax rate.

This development is particularly crucial for American mining operations in Chile, with companies like Freeport McMoRan Copper & Gold Inc. and Albemarle Corporation leading the way in mining extraction.

“Chile is the home to the world’s largest lithium reserves, the precious metal used in emerging technologies like iPhones, EV batteries, and renewable energy storage. So, as the world races to advance clean energy technologies, Chile will be a critical ally for anyone looking to lead the way.”