U.S. Senate fails to pass bill with tax relief for Taiwan

Washington, Aug. 1 (CNA) The Tax Relief for American Workers and Families Act, which included a tax relief proposal for Taiwanese businesses and workers, failed to pass the United States Senate after falling short in a vote on Thursday.

A procedural vote related to the major tax package that would have increased the child tax credit and restored some tax breaks for businesses in the U.S. had 48 votes in favor and 44 opposed, but 60 votes were needed for the measure to overcome the filibuster and pass.

The bill, which was passed with bipartisan support in the House of Representatives, was opposed by Republicans in the Senate, who were not in favor of expanding the child tax credit.

According to the New York Times, they also hope to be in a better negotiating position after November's election, in which they hope a favorable map will help them win a majority in the Senate.

One part of the bill, the United States-Taiwan Expedited Double-Tax Relief Act, established special rules for the taxation of residents of Taiwan with income from sources within the United States.

It covered "the reduction of the rate of withholding of taxes, the application of permanent establishment rules, treatment of income from employment, and the determination of the residency of citizens of Taiwan."

The bill also stipulated, however, that because the measure required full reciprocal benefits, "it does not come into full effect until Taiwan provides the same set of benefits to U.S. persons with income subject to tax in Taiwan."

With Congress now in recess, the bill cannot be revisited until lawmakers return in September.

Taiwan has been working actively with the U.S. on double taxation avoidance.

In May 2023, Vice President Hsiao Bi-khim (蕭美琴), who was Taiwan's top envoy to the U.S. at the time, said eliminating double taxation was a priority in bilateral negotiations.

Only Taiwan among the U.S.' top 10 trading partners does not have a bilateral tax agreement with Washington, Hsiao said, calling it "unfair" that Taiwanese companies have to pay higher taxes than other foreign-invested companies in the U.S.

According to a Bloomberg report last year, Taiwanese companies effectively pay a 51 percent tax rate on profits earned in the U.S., which is at least 10 percentage points higher than companies from South Korea or Australia.

The importance of eliminating double taxation was also emphasized by Minister of Economic Affairs Kuo Jyh-huei's (郭智輝) during his meeting with various U.S. officials in Washington in June.

During the trip, Kuo stressed that the avoidance of double taxation could help attract Taiwanese small and medium-sized enterprises invest in the U.S., and he expressied hope that the Taiwan tax relief proposal could be passed into law as soon as possible.