TAIPEI (Taiwan News) — U.S. senators from both sides of the aisle on Thursday (May 4) unveiled legislation to allow the Biden administration to negotiate and conclude a tax agreement with Taiwan.

The Taiwan Tax Agreement Act of 2023 was introduced by Senators Bob Menendez, Jim Risch, Chris Van Hollen, and Mitt Romney. Similar to a tax treaty, the agreement would play a key role in facilitating investment between Taiwan and the U.S.

This would include vital industries like semiconductors. It would make it easier for companies in both countries to avoid double taxation while protecting against tax evasion.

“As an important economic player in the Indo-Pacific with whom we share our most fundamental values and interests, Taiwan’s robust engagement in global markets—and with the United States—is crucial to supply chain resiliency and Americans’ future economic security. In the face of mounting coercive tactics by Beijing to thwart Taiwan’s international economic engagement, this effort to facilitate U.S.-Taiwan economic relations is more crucial than ever,” said Senate Foreign Relations Committee Chair Bob Menendez.

“By authorizing the administration to negotiate this tax agreement, our legislation will help ensure that U.S. tax policies reflect our commitment to our relationship with Taiwan. The rising threat of China makes it important that we continue to strengthen the economic ties between our two countries,” said Senator Romney.

Due to the fact that Taipei and Washington do not have formal diplomatic relations, the lack of a tax agreement means Taiwanese businesses and individuals are taxed on their income by both the U.S. and Taiwan governments, according to Reuters.