Leaders of the Senate Finance Committee and House Ways and Means Committee introduced a bipartisan bill on Thursday to relieve double taxation of investments between the United States and Taiwan.
“In Idaho and throughout our country, our economic and strategic relationship with Taiwan is as important as ever, and I look forward to continuing our work to get this bill expeditiously passed into law,” he said in a statement.
The bill, which the lawmakers first announced in July, would significantly reduce withholding taxes on dividends, interest, and royalties paid on these cross-border investments and also reduce complexity for dual residents.
‘No-Brainer’ to Boost Partnership
Mr. Wyden said it was “a no-brainer” for the United States to strengthen its economic partnership with Taiwan. The island is the United States’ ninth largest trading partner, according to the U.S. Census Bureau.
“Today is another important step forward toward relieving double-taxation on activity between the U.S. and Taiwan and supercharging chip manufacturing in America,” Mr. Wyden said in a statement.
The United States stands as Taiwan’s second-largest trading partner and export market. According to the ministry’s economic data, Taiwan’s exports to the United States amounted to $75 billion last year.
“The U.S.-Taiwan alliance is ripe for expanded investment, and this bipartisan, bicameral effort will strengthen ties, lead to more jobs, and spur the manufacturing industry,” Mr. Neal said in a statement.
In May, a group of bipartisan senators introduced the Taiwan Tax Agreement Act of 2023, which passed the Senate Foreign Relations Committee in July. A companion version of the legislation has been introduced in the House.
The Taiwan Tax Agreement Act of 2023 would allow the Biden administration to “negotiate and enter into a tax agreement” with Taiwan, allowing businesses on both sides to avoid double taxation.
“A strong economic relationship has long been in U.S. interests, but bolstering that relationship as Taiwan faces growing aggression and coercion by China is even more critical now,” Sen. Jim Risch (R-Idaho) said at the time.
The island is home to the world’s biggest contract chipmaker, Taiwan Semiconductor Manufacturing Corporation (TSMC), which accounts for the production of about 90 percent of the world’s most advanced semiconductors. TSMC is building a chipmaking plant in Arizona, with production scheduled to begin in 2025.
Currently, the United States has tax treaties with over 60 countries to eliminate double taxation. The United States and Taiwan do not have such a treaty because the two sides have not been formal diplomatic allies ever since Washington changed its diplomatic recognition in favor of the Chinese Communist Party’s (CCP’s) rule in Beijing in 1979.
The CCP claims Taiwan is a renegade province that must be united with the mainland by any means necessary, even though the island has never been ruled by the CCP and has been a self-governing democracy since the Chinese Civil War ended in 1949.
