The US House of Representatives yesterday passed the US-Taiwan Expedited Double-Tax Relief Act by a 423 to 1 vote.
The act would first exempt taxation for qualifying Taiwanese residents who provide services in the US, and offer a lower withholding tax rate for qualified Taiwanese residents with particular types of US-sourced income such as dividends or interest.
Secondly, the United States-Taiwan Tax Agreement Authorization Act would improve tax cooperation between the two countries, granting the US president authority to negotiate and establish a tax agreement with Taiwan.
Photo: EPA
The bill is to be first sent to the US Senate to vote on before being sent to the US president for his signature to be passed into legislation.
Taiwan has been pushing for a double taxation act in recent years to benefit businesses on both sides of the Pacific.
The act failed to pass in the previous session of the US congress, but yesterday was passed after a second consideration in a new session of congress.
The act “paves the way for increased Taiwanese investment in the U.S. economy,” the New Democrat Coalition of the House said yesterday in a joint statement.
As the US and Taiwan have no formal diplomatic relations, for decades there was previously no tax agreement, forcing individuals to pay taxes to both governments if they live or work in both nations and giving Taiwanese businesses “an excessively high withholding tax when compared to other close trading partners,” the coalition said.
The bill aims to “lower costs on cross-border investment, help expand domestic production of key technologies including chips, and create high-paying jobs in communities across the [US],” it said.
As Taiwan is one of the US’ largest trade partners, the act would “unleash American manufacturing jobs, support [US] semiconductor and chip manufacturing capabilities and secure strategic supply chains, while reducing [US] dependence on China,” House Committee on Ways and Means Chairman Jason Smith said yesterday on X.
Without the agreement, US employees sent to Taiwan for training at semiconductor factories would have to pay double taxes on their income, US House Representative Judy Chu (趙美心) said.
The US has already signed double taxation agreements with more than 60 countries, but due to Taiwan’s unique political position it cannot partake in traditional tax agreements, making Taiwan the only one of the US’ top 10 trade partners without such an agreement, she added.
Taiwanese businesses have expressed to Chu that in the face of large tax bills, they have reduced investment in the US, while a survey conducted by the American Institute in Taiwan (AIT) found that 79 percent of respondents agreed that double taxation was a deterrent to US investments, she said.
In light of the House passing the bill, President William Lai (賴清德) said he hopes that Legislative Speaker Han Kuo-yu (韓國瑜), who is leading a delegation of bipartisan lawmakers to attend the US presidential inauguration of Donald Trump, could celebrate this new milestone in US-Taiwan relations in Washington as Lai met with the delegation at the Presidential Office this morning.
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