The Senate voted overwhelmingly in favor of ratifying the U.S.-Chile tax treaty on June 22. The treaty had been in the works since 2010 and would prevent Chile from enforcing a 47 percent tax rate on existing mining operations, ensuring stability for U.S. companies operating in the country.
The initial draft of the treaty faced opposition from Sen. Rand Paul (R-Ky.), who raised concerns about information security risks for U.S. citizens. However, the treaty ultimately received overwhelming support, with Paul and Sen. Josh Hawley (R-Mo.) being the only dissenting votes.
Once ratified by President Joe Biden, Chile will become the third Latin American nation to have a double tax treaty with the United States.
The treaty’s ratification is seen as a boost for American competitiveness and would benefit both nations with increased investments and reduced withholding tax rates on interest payments and royalties.
Chile’s tax reform, which aims to generate additional government revenue, has already been passed in the lower house of Congress. It initially applies to large-scale copper operations but is expected to extend to lithium and other commercial mineral projects.
China’s growing influence in South America’s resource-rich countries, including Chile, and the increasing demand for lithium have prompted Washington’s efforts to gain a competitive edge in accessing South America’s mineral wealth.
Chile has plans to expand its lithium sector, aligning with the global demand for lithium-ion batteries used in electric vehicles.