Foreign Visitor Tax Guide:- Section Nine

Tax Treaties

Residents of certain foreign countries may be entitled to reduced tax rates, or exemption from tax, under an applicable tax treaty between their country and the U.S. The hosting department or foreign national must notify their campus payroll office that the person is a resident of a country with which the U.S. has an income tax treaty.

Notification that the individual qualifies for a reduced rate of income tax withholding, or exemption from income tax withholding must be received before this exemption can be granted. The foreign national will also need to submit certain IRS forms (Form W-8BEN or Form 8233, depending on the type of payment that he/she is receiving) that authorize the university to grant the treaty exemption.

Note that the existence of a treaty between the U.S. and the foreign national's country of residence does not always mean that the types of payments made by ASU to the foreign national are exempt from tax under his/her country's tax treaty. In addition, certain countries place specific dollar limitations on the amount of money that can be exempt from tax under their treaty. Contact the payroll office to determine the specific treaty provisions available for each foreign national.

As of 9/30/2002, there are tax treaties in force between the U S. and 61 countries listed at right.

Benefits of tax treaties vary widely, depending on the particular country involved. For example, the tax treaty with the People's Republic of China exempts all personal service income received by Chinese teachers, lecturers, and researchers, but provides an annual personal services exemption of only $5,000 to Chinese students.

IRS Publication 901 summarizes the benefits available to these nonresident aliens by virtue of their tax treaties. Copies of Publication 901 are available at your campus payroll office. A Table of Tax Treaty provisions found in Publication 901 is included in Appendix 4 of this booklet.