After 27 years of negotiations, Israel and the United States have finally signed an agreement protecting individuals from being taxed by both countries on the same income.
The treaty still requires ratification by the U.S. Senate and the Israeli Cabinet and Knesset, but approval appears likely, since the problems that doomed earlier versions have finally been resolved.
The document, signed Tuesday in Jerusalem by Foreign Minister Shimon Peres and the U.S. ambassador to Israel, William Harrop, was actually a protocol amending a 1975 treaty and a 1980 protocol that was never implemented.
The double taxation treaty ensures that individuals and corporations will not be forced to pay taxes in both countries on the same income, and also prevents foreigners from being taxed at a higher rate than citizens.
The current agreement extends the protection to state and local taxes as well as national taxes.
The previous treaty was never implemented because Israel rejected U.S. demands that the General Accounting Office and congressional oversight committees have access to any information that U.S. tax authorities requested from Israel.
Israel originally feared that this requirement would frighten away Jewish investors, but has now given in on this issue.
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