In committee
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.
This legislation reduces US tax rates on investment income and wages earned by Taiwanese residents and companies, cutting standard withholding taxes on dividends, interest, and royalties from 30 percent down to 10 or 15 percent. To take effect, the US Treasury must first confirm that Taiwan provides identical tax reductions to American businesses and workers operating in Taiwan. The bill also authorizes the President to negotiate a comprehensive double-taxation agreement with Taiwan, which would require final approval from Congress.
People affected—The text applies broadly to qualified individual and corporate residents of Taiwan engaging in U.S. economic activity, but specifies no population count.
Fiscal magnitude—no CBO estimate published
Reach53provisional · pending reviewrigor: heuristic llm
What this bill touches.
Aid & alliances+30
Who it helps · who it burdens.
Who it helps
- Qualified residents and corporations of TaiwanReceives reduced U.S. withholding tax rates (lowered from 30 percent to 10 or 15 percent) on U.S.-sourced interest, dividends, and royalties, lower branch profits taxes, and limits on U.S. tax liability to income effectively connected with a permanent establishment (Sec. 102(a)).
- Taiwanese temporary workers, entertainers, and athletesReceives exemptions from U.S. income and withholding taxes for qualified wages paid by non-U.S. employers and up to $30,000 in U.S. earnings for entertainers and athletes (Sec. 102(a)).
- U.S. persons and businesses operating in TaiwanReceives reciprocal tax benefits in Taiwan, as the bill conditions U.S. double-tax relief on the Department of the Treasury confirming that Taiwan extends reciprocal tax benefits to U.S. persons (Sec. 102(a)(894A)(e)(1)).
Who it burdens
- U.S. withholding agents and employersMust follow new reporting, record-keeping, and verification rules established by Treasury to determine whether payees qualify for reduced withholding tax rates or exemptions (Sec. 102(a)(894A)(f)(1)(C)-(D)).
- Department of the TreasuryTasked with issuing administrative guidance and anti-abuse rules, evaluating Taiwan's reciprocity, consulting with and briefing congressional committees, publishing contemplated agreements, and submitting technical explanations to Congress (Sec. 102(a)(894A)(e)-(f), Sec. 204–206).
Who opposes it
- Entities owned or controlled by foreign countries of concernDisqualified from being treated as qualifying intermediate owners and excluded from claiming active trade or business tax relief under anti-avoidance rules (Sec. 102(a)(894A)(c)(2)(E), (c)(4)(B)(iii)).