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Treasury Secretary Geithner and Chilean Finance Minister Velasco sign the United States' first income tax treaty with Chile, which would become the second U.S. tax accord with a South American country if ratified by the Senate. The action, the result of a decade-long effort, comes the same day U.S. and Hungarian officials sign a new U.S.-Hungary tax treaty in Budapest. Before signing in Washington, D.C., Geithner says, “Today we begin a new chapter in the strong economic relationship between the United States and Chile.” Provisions of the new tax treaty with Chile include reductions in source-country withholding taxes on certain cross-border payments of dividends, interest, and royalties; rules to determine when an enterprise or an individual of one country is subject to tax on business activities in the other country; and rules to enhance the mobility of labor by coordinating the tax aspects of the U.S. and Chilean pension systems.
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