TAIPEI (Taiwan News) — The US House of Representatives passed a bill on Wednesday that provides tax relief to Taiwanese companies and workers.
After failing to pass during the previous session of Congress, the United States-Taiwan Expedited Double-Tax Relief Act was approved by the House with a vote of 431 in favor to 1 opposed, per CNA. The bill will be sent to the Senate for a vote and will only take effect after being signed by the president.
The bill has a two-pronged approach to address double taxation between Taiwan and the US. First, it amends the current US tax laws to exempt eligible Taiwan residents who provide services in the US from being taxed on their income.
In addition, qualified Taiwan residents with income from specific US sources, such as interest, dividends, or royalties will be entitled to a lower withholding tax rate.
Second, it establishes the "United States-Taiwan Tax Agreement Authorization Act," which authorizes the US president to negotiate and enter an agreement with Taiwan on double taxation through legislation.
Before the vote on Wednesday, Jason Smith, chair of the House Committee on Ways and Means, pointed out that the US is Taiwan's largest trading partner without a tax treaty. Amid concerns about overdependence on China, Smith argued the bill “establishes fair tax treatment for both American workers and businesses operating in Taiwan and puts Americans on equal footing with our competitors around the world.”
Representative Darin LaHood, noted that the US has tax agreements with over 60 foreign tax jurisdictions, yet despite being America's seventh-largest trading partner there is no formal tax arrangement with Taiwan. LaHood said the bill will bring “much-needed certainty to businesses and workers between our two countries.”
LaHood stressed the importance of the US relationship with Taiwan in trade and national security. He said the bill will open the door for the two countries to continue to foster strong economic partnerships, "especially in technology and semiconductor sectors, and help the United States to reduce our reliance on China.”
