TAIPEI (Taiwan News) — The U.S. House of Representatives passed the Tax Relief for American Families and Workers Act on Wednesday (Jan. 31), which includes a section on U.S.-Taiwan double-tax avoidance and paves the way for a bilateral tax agreement.

The act “strengthens America’s competitive position with China by removing the current double taxation that exists for businesses and workers with a footprint in both the United States and Taiwan,” according to a House press release. It reduces the rate of withholding tax to certain U.S. income sources received by qualified residents of Taiwan from 30% to 10%. This includes interest, dividends, royalties, and dividend equivalent amounts.

The bill now will be sent to the Senate for review. If signed into law by President Joe Biden, it would not come into full effect until Taiwan passes a law providing the same set of benefits to Americans with income subject to tax in Taiwan.

Tax Relief for American Families and Workers Act aims to help small businesses, families, and workers by “raising the immediate expensing cap for small businesses, cutting red tape for job creators, giving tax relief to families hit by disasters.”

Taiwan has been urging the U.S. to initiate a double tax avoidance deal in recent years. Speaking during the recent visit by a U.S. congressional delegation, President Tsai Ing-wen (蔡英文) said such an agreement would “help create a mutually beneficial environment for Taiwan-US economic exchange.”