The United States has agreements with several countries, called tabination agreements, to avoid double taxation of income with respect to social security taxes. These agreements should be taken into account when it is established whether a foreigner is subject to U.S. Social Security/Medicare tax or whether a U.S. citizen or resident alien is subject to a foreign country`s social security taxes. There are many nations in the world — Singapore and South Africa, for example — that do not participate in tablisation agreements with other countries. The explanation for this point varies from country to country. The lack of agreement is usually due to one of the possible reasons: if several States are involved, the Community social security provisions determine which country must pay benefits and which national legislation applies. The basic principles are simple: international social security agreements are beneficial both for people who are currently working and for those whose careers have ended. For current workers, the agreements remove double contributions that they might otherwise make to the social security plans of the United States and another country.
For people who have worked both in the U.S. and abroad and are now retired, disabled, or dead, agreements often result in the payment of benefits that the worker or their family members would not otherwise be entitled to. To understand the complex situation that can exist when a worker is sent abroad – based solely on the cost of social security – look at Figures 2 and 3 below, which show workers` or employers` social security contributions as a percentage of income in a number of home countries. The charts use USD 150,000 and the corresponding monetary value in each country. This Agreement may be amended in the future by amendments which, from their entry into force, shall be considered as an integral part of this Agreement. . . .