U.S.-Taiwan Expedited Double-Tax Relief Act (H.R.33 & S.199)
In 2024, Taiwan ranked as the United States’ seventh-largest trading partner, while the United States remained Taiwan’s second-largest trading partner. Despite this strong economic relationship, the existing double taxation scheme has unnecessarily hindered cross-border trade and investment opportunities between the U.S. and Taiwan.
Notably, 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 United States. Similarly, American companies investing in Taiwan face challenges and uncertainty due to the absence of a formal Avoidance of Double Taxation Agreement (ADTA).
To address these issues, the “United States-Taiwan Expedited Double-Tax Relief Act” (H.R.33) would create a new tax code section with special rules to relieve double taxation on U.S.-Taiwan cross-border investment. It would also offer substantial tax benefits, such as reduced withholding taxes, to qualified residents of Taiwan with income from U.S. sources. However, this new tax code section will only come into effect once Taiwan provides the same reciprocal benefits to U.S. persons with income subject to tax in Taiwan.
The bill also includes the “United States-Taiwan Tax Agreement Authorization Act,” which grants 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.
The U.S. House of Representatives approved a rules package for the 119th Congress to fast-track twelve priority bills, including H.R.33. The bill was passed by the House on January 15, 2025, with an overwhelming 423-1 vote.
Relieving U.S.-Taiwan double taxation will benefit both American and Taiwanese businesses, fostering greater bilateral trade and investment. We urge the Senate to swiftly pass its version of the bill (S.199) and ensure this critical legislation becomes law.