Tax Treaties

1. Income tax treaties between the United States and foreign countries typically provide for either a reduction in the statutory rate of tax or an exemption from tax for certain types of income received by citizens and/or residents of the contracting countries.

2. Many foreign countries withhold tax at the source on income flowing out of such country. If the statutory withholding rate exceeds the treaty rate of tax, one of the following methods may be used to adjust for the treaty rate of tax.

   1. The foreign country may automatically reduce the withholding rate to the treaty rate of tax in the case of income of recipients who have evidence of United States residency; or

   2. The foreign country may withhold income taxes at its statutory rates and require recipients to recover taxes paid in excess of the reduced treaty rate by filing claims for refund which include evidence that the recipient is a resident of the United States and entitled to the treaty benefits.

3. The following chart is a list of the most current treaty countries. The corresponding country codes should be used when entering the Form 8802, certification application on the Form 6166 database: