Treasury to interpret references to NAFTA as references to USMCA for certain tax treaty purposes

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May 2020

Overview

The IRS and Treasury issued Announcement 2020-06 on May 19, explaining how to interpret references in US income tax treaties to the North American Free Trade Agreement (NAFTA) once it is replaced by the United States-Mexico-Canada Agreement (USMCA).

The takeaway

The announcement provides a helpful resolution, at least where US tax is at issue, to a consideration that otherwise may have led to uncertainty for taxpayers claiming treaty benefits, where the derivative benefits test is relied upon.

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Doug McHoney

International Tax Services Leader, PwC US

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