Message from the President to the Senate on the Bilateral Tax Agreement with Hungary

TO THE SENATE OF THE UNITED STATES:

I transmit herewith, for the advice and consent of the Senate to its ratification, the Convention between the Government of the United States of America and the Government of the Republic of Hungary for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, signed on February 4, 2010, at Budapest (the "proposed Convention") and a related agreement effected by an exchange of notes on February 4, 2010.  I also transmit for the information of the Senate the report of the Department of State, which includes an Overview of the proposed Convention and related agreement.

The proposed Convention and related agreement were negotiated to bring U.S.-Hungary tax treaty relations into closer conformity with current U.S. tax treaty policies.  For example, the proposed Convention contains comprehensive provisions designed to address "treaty shopping," which is the inappropriate use of a tax treaty by residents of a third country.  The existing Convention with Hungary, signed in 1979, does not contain treaty shopping protections and, as a result, has been abused by third-country investors in recent years.  For this reason, concluding the proposed Convention has been a top priority for the Department of the Treasury's tax treaty program.

I recommend that the Senate give early and favorable consideration to the proposed Convention and related agreement and give its advice and consent to their ratification.

BARACK OBAMA

THE WHITE HOUSE,
November 15, 2010.