September 12, 2023
Finance Committee sets Taiwan tax markup, releases mark
The Senate Finance Committee has scheduled a markup of the US-Taiwan Expedited Double Taxation Relief Act for Thursday, September 14, at 10:00 a.m., and the staff of the Joint Committee on Taxation today released a description of the Chairman's Mark. The proposal is bipartisan and follows the Committee's July 12 discussion draft on the issue released with Ways & Means leaders.
JCT said that, under the proposal, income from US sources earned or received by qualified residents of Taiwan is entitled to benefits that include reduced tax rates for income otherwise subject to the 30-percent gross-basis tax; with respect to income effectively connected with a U.S. trade or business, taxation of only that income effectively connected with a U.S. permanent establishment; and preferential treatment of wages and related income earned by such qualified residents.
Similar to the discussion draft, the tax on US-source interest, royalties, and gains paid to or received by a qualified resident of Taiwan would be reduced to 10%. The tax on US-source dividends paid to or received by a qualified resident of Taiwan would be reduced to 15%, or a 10% rate for certain owners of at least 10% of the shares of stock in a corporation, subject to limitations.
The Finance Committee traditionally marks up legislation on a conceptual basis and produces legislative language at a later date.
Separately, the Senate Foreign Relations Committee approved July 13 the Taiwan Tax Agreement Act (S. 1457) that would authorize the President to negotiate and enter into a tax agreement with Taiwan to relieve American and Taiwanese tax residents from double taxation and implement measures to limit the risk of tax evasion or avoidance.
The JCT description is attached below and also available here.