A new tax agreement in the works between the U.S. and Chile would reduce barriers to trade and help U.S. companies compete with "those based in other countries that already have treaties with Chile," U.S. Secretary of Treasury Janet Yellen wrote to U.S. Senate Majority Leader Chuck Schumer, a Democrat, and Senate Minority Leader Mitch McConnell, a Republican.

The U.S. Treasury also believes the Senate should move forward on the agreement by the end of the year. This would be only the second income tax treaty between the U.S. and a Latin American country.

It is awaiting approval by the full Senate after the chamber's Foreign Relations Committee voted on it in March. 

According to Bloomberg, bilateral income tax treaties encourage cross-border investment by helping companies avoid paying double taxes on the same income, creating a framework for resolving tax disputes between companies and governments by offering lower withholding rates.

The U.S. Chamber of Commerce also wrote a letter in support to members of the Senate Foreign Relations Committee, urging the Committee to support its early ratification this year.

"Approval of this treaty has become an urgent priority for U.S. companies doing business in Chile. Due to changes in Chilean tax law that went into effect in 2014, corporate tax rates in Chile increased. Without a ratified treaty to avoid double taxation, taxes for U.S. companies with operations in Chile will rise by as much as 44%," the letter read.

The treaty would benefit a large number of Chilean companies wishing to increase their investments in the United States, plus the investments would have the potential to create thousands of jobs.