To amend the Internal Revenue Code of 1986 to provide special rules for the taxation of certain residents of Taiwan with income from sources within the United States.

Sponsor: Jason Smith (Republican-MO)January 3, 2025

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Introduced

In Committee

Passed One Chamber

Passed Both Chambers

Signed into Law

Received in the Senate and Read twice and referred to the Committee on Finance.

Lowers U.S. taxes on certain income for Taiwan residents and businesses, and allows for a future tax agreement.

This bill would reduce certain U.S. income tax rates for qualified residents and businesses from Taiwan. The goal is to prevent them from being taxed twice on the same income by both the U.S. and Taiwan. It also sets up a process for the U.S. to negotiate a broader tax agreement with Taiwan, but only if Taiwan offers similar benefits to U.S. persons.

What Would Change

Today, qualified Taiwan residents and businesses generally face a 30% U.S. withholding tax on certain types of income. There is currently no specific U.S.-Taiwan tax treaty to prevent double taxation. After this bill, if Taiwan provides similar benefits to U.S. persons, qualified Taiwan residents and businesses would see reduced U.S. tax rates on certain income. For instance, rates could drop to 10% or 15% instead of 30%, and some income would be exempt. The President would also be authorized to negotiate a more comprehensive tax agreement with Taiwan.

Key Provisions

Lowers the U.S. withholding tax rate on interest, dividends, and royalties for qualified Taiwan residents and businesses from 30% to 10% or 15%.
Reduces the U.S. branch profits tax rate for qualified Taiwanese corporations from 30% to 10%.
Exempts certain wages earned in the U.S. by qualified Taiwan residents from U.S. income tax.
Exempts income under $30,000 for qualified Taiwanese entertainers and athletes performing in the U.S. from U.S. income tax.
Authorizes the President to negotiate a broader tax agreement with Taiwan.
Requires Taiwan to offer similar tax benefits to U.S. persons before the U.S. tax reductions take effect.