Washington, July 13 (CNA) Amid growing advocacy for the U.S. government to enter into negotiations with Taiwan on avoidance of double taxation, the U.S. Senate Foreign Relations Committee on Thursday passed the Taiwan Tax Agreement Act 2023.
The Act was originally proposed on a bipartisan basis by Democrat Senators Robert Menendez and Chris Van Hollen, and Republican Jim Risch and Mitt Rommey in May. However, the Act passed by the committee came from a revised version presented on Thursday by Menendez, chairman of the Senate Foreign Relations Committee.
The Act aims to authorize the American Institute in Taiwan (AIT) and the Taipei Economic and Cultural Representative Office (TECRO) to negotiate a tax agreement in a bid to deal with the current double taxation issues, which has bothered many Taiwanese investors in the United States.
The Act describes Taiwan as one of the largest trading partners of the U.S. as well as one of the world’s largest economies. It says the further strengthening of economic relations between the U.S. and Taiwan remains critical, in particular in the wake of Taiwan’s strategic importance and the increasing threat posed by China.
“A tax agreement with Taiwan would play a key role in facilitating and promoting increased bilateral investment and trade between the United States and Taiwan, fortifying the relationship between the two more generally, and encouraging other nations to increase their economic linkages to Taiwan,” the Act states.
It also stipulates that a future tax agreement would apply to tax residents of the U.S. and Taiwan, but exclude enterprises headquartered in China or in a third country that does not have a comprehensive income tax treaty with Washington.
So far, the U.S. has signed tax agreements covering 65 jurisdictions to facilitate economic activity, boost bilateral cooperation, and benefit U.S. businesses and other American taxpayers.
According to the Act, the U.S. president shall provide written notification to the “appropriate congressional committees” of the commencement of negotiations between the AIT and TECRO on a tax agreement at least 15 calendar days before such commencement.
According to the Act, not later than 90 days after commencement of negotiations on the agreement, and every 180 days until conclusion of the agreement, the U.S. president shall provide a briefing to the appropriate congressional committees providing an update on the status of negotiations, including a description of elements under negotiations.
The appropriate congressional committees refer to the Committee on Foreign Relations, the Committee on Finance of the Senate, the Committee on Foreign Affairs and the Committee on Ways and Means of the House of Representatives, according to the Act.
The Act stipulates the tax agreement shall not take effect until after Congress passes a concurrent resolution of approval.
The review of the Act by the U.S. Senate Foreign Relations Committee had been previously scheduled for June 8 but was delayed twice to Thursday partly due to a boycott by Republican Senate Rand Paul, who raised concerns over taxpayers’ privacy.
Taiwan has recently strongly urged the U.S. to enter into negotiations to sign an agreement to avoid double taxation.
When she met with a U.S. delegation of conservative Republican lawmakers on July 4, President Tsai Ing-wen (蔡英文) said Taiwan hopes to negotiate an agreement on avoiding double taxation with the U.S., arguing that such a deal would encourage bilateral investment and trade cooperation and create more opportunities for businesses from both sides.
In response, AIT Chair Laura Rosenberger said in Washington on July 6 that the topic of the avoidance of double taxation between the U.S. and Taiwan was an issue that is very high on the radar of policymakers in Washington as well as for Tsai and her colleagues.
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