Thu, Oct 31, 2024 page2

• US, Taiwan set to hold talks on double taxation

  BENEFITS: Such a pact would reduce tax barriers and encourage investment in the US by Taiwanese firms that are vital to building a chip ecosystem, the Treasury said

  • Staff writer, with CNA and Reuters
  • • 
    • 
    • 

  The first round of talks between Taiwan and the US on an agreement to prevent the double taxation of income is expected to take place in the coming weeks, the US Department of the Treasury said on Tuesday.

  Both sides have said such an agreement would foster more investment, and Taipei has long pushed for it. The move was announced as a senior US diplomat who helps manage ties with Taiwan arrived in Taipei on Tuesday.

  Washington and Taipei do not have formal diplomatic relations, so the lack of a tax agreement means Taiwanese businesses and individuals are taxed on their income by both the US and Taiwanese governments if they work or live in both nations.

  

  A Taiwanese flag, right, and a US flag are pictured in Taipei on Feb. 22.

  Photo: Cheng I-hwa, Bloomberg

  Taiwan is a major global supplier of semiconductors essential to a wide range of consumer goods and military equipment. Washington has been keen to get Taiwanese chip companies to build factories in the US.

  The launch of the “negotiations on a comprehensive agreement to address double taxation issues” resulted from the US Congress’ efforts to push progress in the area through draft legislation, such as the proposed US-Taiwan Tax Agreement Authorization Act, the treasury department said in a press statement on Tuesday.

  US President Joe Biden’s administration is committed to “engaging with relevant committees throughout the negotiation process and working with Congress on legislation to approve a final agreement and implement the agreement through the Internal Revenue Code,” it said.

  Both the US and Taiwan can benefit from a comprehensive tax agreement, because such an agreement can “reduce double taxation barriers for further investment by Taiwan into the United States, and vice versa, particularly for the small and medium-sized enterprises that are crucial to a complete semiconductor ecosystem,” the treasury said.

  The text of the agreement is expected to be based on the US Model Income Tax Convention and covers such issues as “reduction of withholding taxes on cross-border payments of dividends, interest and royalties,” and “provisions governing permanent establishments and tax treatment of temporary cross-border workers,” it said.

  The agreement should also have “provisions intended to prevent instances of non-taxation of income as well as tax forum shopping,” dispute resolution mechanisms, and provisions for the exchange of information between the US and Taiwanese revenue authorities, so both of them can carry out their duties as tax administrators, it said.

  The negotiations are to be conducted through the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the US, it said.

  As of July 31, Taiwan had signed comprehensive agreements on double taxation with 35 countries, including Canada, Germany, Israel, Japan, the UK, Australia and Paraguay, information published on the Ministry of Finance’s Web site shows.
• Most Popular

  • 1

    Bukele proposes prisoner swap with Maduro

  • 2

    HK, Macau residency rules tightened

  • 3

    Wild’s top line too much for Vegas Golden Knights

  • 4

    China turns on the charm for Taiwan businesses: study

  • 5

    Taipei would welcome return of Honduras as ally if it seeks to recognize Taiwan