FAPA Applauds the House’s Passage of the U.S.-Taiwan Expedited Double-Tax Relief Act
The Formosan Association for Public Affairs (FAPA) applauds the U.S. House’s passage of the “United States-Taiwan Expedited Double-Tax Relief Act” (H.R.33) on January 15, 2025, with an overwhelming vote of 423-1. This bipartisan landmark legislation represents a pivotal step toward deepening the economic partnership between the U.S. and Taiwan by addressing the critical issue of double taxation.
Chair of the House Ways and Means Committee, Congressman Jason Smith (R-MO), remarked that this legislation will “unleash more American manufacturing investment and jobs and help combat China’s harmful influence.” “Enacting this legislation will help create jobs here at home.”
Congressman Jake Auchincloss (D-MA) stated that the U.S. and Taiwan “should go further to strengthen one another’s economies through increased flows of trade and investment.” Ending double taxation on Taiwanese investment in the U.S. “is especially critical” as we look to revive semiconductor manufacturing.
Taiwan is a vital economic partner for the U.S., yet the existing double taxation scheme has unnecessarily hindered cross-border trade and investment between the U.S. and Taiwan. Among the U.S.’ top ten trading partners, Taiwan is the only one without a bilateral tax agreement with the U.S., leaving Taiwanese companies subject to higher tax rates than other foreign-invested firms operating in the U.S. Similarly, American companies investing in Taiwan face challenges and uncertainty due to the absence of an avoidance of double taxation agreement.
To address these issues, the U.S.-Taiwan Expedited Double-Tax Relief Act would create a new tax code section with special rules to relieve double taxation on U.S.-Taiwan cross-border investment and provide substantial tax benefits, such as reduced withholding taxes, to qualified residents of Taiwan with income from U.S. sources.
The bill also includes the “United States-Taiwan Tax Agreement Authorization Act,” granting the U.S. President authority to negotiate and enter into a tax agreement with Taiwan. This agreement would include provisions typically found in U.S. tax treaties, allowing residents of foreign countries to benefit from reduced tax rates or tax exemptions on certain U.S.-sourced income.
FAPA President Dr. Su-Mei Kao states: “We commend the leadership of House Ways and Means Committee Chairman Jason Smith (R-MO) and Ranking Member Richard Neal (D-MA) for passing the U.S.-Taiwan Expedited Double-Tax Relief Act, a vital piece of legislation that FAPA has ardently championed. By relieving double taxation and providing critical tax benefits, this Act will bolster investment and trade between the U.S. and Taiwan while enhancing their economic partnership and global competitiveness.”
Dr. Kao emphasizes: “This legislation will also strengthen national security against China’s economic influence and coercion. We strongly urge the Senate to act swiftly in passing this critical bill and ensure it reaches the President’s desk for prompt enactment.”
Read the full FAPA statement HERE.
Supreme Court Upholds TikTok Ban in the U.S.
On January 17, 2025, the U.S. Supreme Court issued its decision in TikTok Inc. v. Garland (No. 24-656), affirming the federal government’s authority to regulate or ban applications tied to foreign adversaries. The ruling upheld the TikTok divest-or-ban law, formally the “Protecting Americans from Foreign Adversary Controlled Applications Act.”
The Supreme Court supported Congress’s findings that TikTok’s data practices and ties to its parent company, the Chinese Communist Party-controlled ByteDance, pose a legitimate national security threat. It concluded that the government’s actions, including potential divestiture or restrictions, did not violate TikTok or its users’ First Amendment rights, as the measures were carefully designed to address security concerns.
The opinion carefully balanced national security with constitutional freedoms, emphasizing that substantial evidence supported the risks of foreign access to user data. While recognizing the value of free expression, the Court affirmed that national security could justify well-crafted restrictions.
For further details, the full opinion is available HERE.
Rubio, Trump’s Secretary of State Nominee: Defending Taiwan “Critical”
On January 15, U.S. Senator Marco Rubio (R-FL), U.S. President-elect Donald Trump’s nominee for secretary of state, stated that defending Taiwan against China is “critical” for the United States.
“We are going to do everything when we reject any effort to coerce, intimidate, and or forcibly drive Taiwan to do whatever China wants them to do,” Rubio said during his Senate Foreign Relations Committee confirmation hearing.
Rubio urged China to “stop messing around with Taiwan” and pledged to continue the United States’ “one China” policy, which he noted has been “consistent and reaffirmed by every administration since 1979.”
According to Rubio, the U.S. policy towards the issue of Taiwan, based on the Taiwan Relations Act and the Six Assurances, means that the United States would “make no commitment to not helping” Taiwan in its national defense and would not “force any outcomes.”
“We’re not going to pressure Taiwan in any arrangement,” he said.
Referring to China’s efforts to isolate Taiwan from the international community, Rubio said it is “important” for the U.S. to enable Taiwan’s involvement in global forums “irrespective” of China’s claims over Taiwan.
He expressed strong support for Taiwan to apply a “porcupine strategy,” emphasizing that making “the cost of invading Taiwan higher than the benefit” could deter Chinese aggression.
“That’s critical, not just to defending Taiwan [but] to preventing a cataclysmic military intervention in the Indo-Pacific,” Rubio said.
In discussions on the U.S.-China relationship, Rubio described China as “the most potent and dangerous near-peer adversary this nation has ever confronted,” warning of severe consequences if the U.S. fails to take decisive action.
A Republican senator from Florida since 2011, Rubio has been a steadfast opponent of communism and a strong advocate for policies to counter China and its aggression toward Taiwan.
References:
[1] Focus Taiwan
[2] Kyodo News
Taiwan Exempt from U.S. New Restrictions on AI Chip Exports
On January 13, the outgoing Biden administration announced new regulations to further restrict the exports of advanced computing chips used to develop artificial intelligence (AI). Taiwan is among the United States’ 18 allies exempt from these restrictions.
U.S. Secretary of Commerce Gina Raimondo emphasized that it is “critical” to preserve the U.S.’ leadership in AI and the development of AI-related computer chips, stating, “As AI becomes more powerful, the risks to our national security become even more intense.”
The new regulatory framework “is designed to safeguard the most advanced AI technology and ensure that it stays out of the hands of our foreign adversaries, but also enabling the broad diffusion and sharing of the benefits with partner countries,” she said.
AI chip exports will be regulated under a three-tiered control system outlined in the proposed “Interim Final Rule on Artificial Intelligence Diffusion.” The rule provides a 120-day public comment period and allows industries a year to adapt to the new security requirements.
Under the framework, 18 key U.S. allies, including Taiwan, are classified in the first tier, exempting them from the new restrictions on exports of advanced AI chips. For these first-tier countries, the new rule also does not restrict exports of the most powerful closed-weight frontier AI models that are stored securely.
In addition to Taiwan, the exempted allies are Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, the Republic of Korea, Spain, Sweden, and the United Kingdom.
A total of 22 countries, including China, Russia, Iran, North Korea, Venezuela, Nicaragua, and Syria, are categorized in the third tier and are already subject to restrictions on the export of advanced AI chips. The new regulations further extend these restrictions to include the transfers of the most powerful closed-weight frontier AI models to these nations.
Countries not classified in the first or third tiers are grouped into tier two. While many countries in this tier are already subject to advanced AI chip licensing requirements, the new rule broadens these requirements to encompass all tier-two countries.
Because the framework includes a 120-day comment period, the incoming Trump administration could ultimately determine the rules governing the exports of advanced computing chips and powerful closed AI model weights.
