House passes U.S.-Taiwan double taxation relief bill

Washington, Jan. 15 (CNA) The United States House of Representatives on Wednesday passed a bill that seeks to reduce tax payments by Taiwanese businesses and employees in the U.S.

The United States-Taiwan Expedited Double-Tax Relief Act, which was passed in the House by 423-1 vote, will now be sent to the U.S. Senate for a vote, and if approved, will be sent to the American president to be signed into law.

The main aim of the bill is to prevent double taxation between the U.S. and Taiwan. It seeks to amend the current U.S. tax laws to provide tax exemptions for eligible Taiwanese residents in the U.S. and to lower the withholding tax rates on income from specific sources in the U.S., such as dividends and interest.

It also seeks to enact the United States-Taiwan Tax Agreement Authorization Act, which would authorize the U.S. president "to negotiate and enter into a tax agreement relative to Taiwan."

Representative Jason Smith, who chairs the Ways and Means Committee in the House, said before the vote that while Taiwan is the U.S.' eighth largest trading partner, it has remained "conspicuously absent" from the list of 66 countries with which that the U.S. has income tax treaties.

The new bill "promotes economic efficiency and integration, strengthens our strategic partnership with Taiwan, and reinforces the long-term economic stability American businesses and our trusted allies need to invest for the future and combat the influence of bad actors," Smith said.

Meanwhile, Representative Judy Chu said that the current laws require Americans doing business in Taiwan to pay income tax in both places on the same earnings, and vice versa, which has "hurt businesses of all sizes."

She noted that among the U.S.' top 10 trading partners, "only Taiwan lacks a double tax agreement."

She also referred to a survey conducted by the American Institute in Taiwan, which showed that for 79 percent of Taiwan companies, the double taxation of income requirement was "a considerable factor" that prevented them from "investing more in the U.S."