[Congressional Record Volume 171, Number 8 (Wednesday, January 15, 2025)]
[House]
[Pages H160-H168]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
UNITED STATES-TAIWAN EXPEDITED DOUBLE-TAX RELIEF ACT
Mr. SMITH of Missouri. Mr. Speaker, pursuant to House Resolution 5, I
call up the bill (H.R. 33) 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, and ask for
its immediate consideration in the House.
The Clerk read the title of the bill.
The SPEAKER pro tempore. Pursuant to House Resolution 5, the bill is
considered read.
The text of the bill is as follows:
H.R. 33
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
TITLE I--UNITED STATES-TAIWAN EXPEDITED DOUBLE-TAX RELIEF ACT
SEC. 101. SHORT TITLE.
This title may be cited as the ``United States-Taiwan
Expedited Double-Tax Relief Act''.
SEC. 102. SPECIAL RULES FOR TAXATION OF CERTAIN RESIDENTS OF
TAIWAN.
(a) In General.--Subpart D of part II of subchapter N of
chapter 1 of the Internal Revenue Code of 1986 is amended by
inserting after section 894 the following new section:
``SEC. 894A. SPECIAL RULES FOR QUALIFIED RESIDENTS OF TAIWAN.
``(a) Certain Income From United States Sources.--
``(1) Interest, dividends, and royalties, etc.--
``(A) In general.--In the case of interest (other than
original issue discount), dividends, royalties, amounts
described in section 871(a)(1)(C), and gains described in
section 871(a)(1)(D) received by or paid to a qualified
resident of Taiwan--
``(i) sections 871(a), 881(a), 1441(a), 1441(c)(5), and
1442(a) shall each be applied by substituting `the applicable
percentage (as defined in section 894A(a)(1)(C))' for `30
percent' each place it appears, and
``(ii) sections 871(a), 881(a), and 1441(c)(1) shall each
be applied by substituting `a United States permanent
establishment of a qualified resident of Taiwan' for `a trade
or business within the United States' each place it appears.
``(B) Exceptions.--
``(i) In general.--Subparagraph (A) shall not apply to--
``(I) any dividend received from or paid by a real estate
investment trust which is not a qualified REIT dividend,
``(II) any amount subject to section 897,
``(III) any amount received from or paid by an expatriated
entity (as defined in section 7874(a)(2)) to a foreign
related person (as defined in section 7874(d)(3)), and
``(IV) any amount which is included in income under section
860C to the extent that such amount does not exceed an excess
inclusion with respect to a REMIC.
``(ii) Qualified reit dividend.--For purposes of clause
(i)(I), the term `qualified REIT dividend' means any dividend
received from or paid by a real estate investment trust if
such dividend is paid with respect to a class of shares that
is publicly traded and the recipient of the dividend is a
person who holds an interest in any class of shares of the
real estate investment trust of not more than 5 percent.
``(C) Applicable percentage.--For purposes of applying
subparagraph (A)(i)--
``(i) In general.--Except as provided in clause (ii), the
term `applicable percentage' means 10 percent.
``(ii) Special rules for dividends.-- In the case of any
dividend in respect of stock received by or paid to a
qualified resident of Taiwan, the applicable percentage shall
be 15
[[Page H161]]
percent (10 percent in the case of a dividend which meets the
requirements of subparagraph (D) and is received by or paid
to an entity taxed as a corporation in Taiwan).
``(D) Requirements for lower dividend rate.--
``(i) In general.--The requirements of this subparagraph
are met with respect to any dividend in respect of stock in a
corporation if, at all times during the 12-month period
ending on the date such stock becomes ex-dividend with
respect to such dividend--
``(I) the dividend is derived by a qualified resident of
Taiwan, and
``(II) such qualified resident of Taiwan has held directly
at least 10 percent (by vote and value) of the total
outstanding shares of stock in such corporation.
For purposes of subclause (II), a person shall be treated as
directly holding a share of stock during any period described
in the preceding sentence if the share was held by a
corporation from which such person later acquired that share
and such corporation was, at the time the share was acquired,
both a connected person to such person and a qualified
resident of Taiwan.
``(ii) Exception for rics and reits.--Notwithstanding
clause (i), the requirements of this subparagraph shall not
be treated as met with respect to any dividend paid by a
regulated investment company or a real estate investment
trust.
``(2) Qualified wages.--
``(A) In general.--No tax shall be imposed under this
chapter (and no amount shall be withheld under section
1441(a) or chapter 24) with respect to qualified wages paid
to a qualified resident of Taiwan who--
``(i) is not a resident of the United States (determined
without regard to subsection (c)(3)(E)), or
``(ii) is employed as a member of the regular component of
a ship or aircraft operated in international traffic.
``(B) Qualified wages.--
``(i) In general.--The term `qualified wages' means wages,
salaries, or similar remunerations with respect to employment
involving the performance of personal services within the
United States which--
``(I) are paid by (or on behalf of) any employer other than
a United States person, and
``(II) are not borne by a United States permanent
establishment of any person other than a United States
person.
``(ii) Exceptions.--Such term shall not include directors'
fees, income derived as an entertainer or athlete, income
derived as a student or trainee, pensions, amounts paid with
respect to employment with the United States, any State (or
political subdivision thereof), or any possession of the
United States (or any political subdivision thereof), or
other amounts specified in regulations or guidance under
subsection (f)(1)(F).
``(3) Income derived from entertainment or athletic
activities.--
``(A) In general.--No tax shall be imposed under this
chapter (and no amount shall be withheld under section
1441(a) or chapter 24) with respect to income derived by an
entertainer or athlete who is a qualified resident of Taiwan
from personal activities as such performed in the United
States if the aggregate amount of gross receipts from such
activities for the taxable year do not exceed $30,000.
``(B) Exception.--Subparagraph (A) shall not apply with
respect to--
``(i) income which is qualified wages (as defined in
paragraph (2)(B), determined without regard to clause (ii)
thereof), or
``(ii) income which is effectively connected with a United
States permanent establishment.
``(b) Income Connected With a United States Permanent
Establishment of a Qualified Resident of Taiwan.--
``(1) In general.--
``(A) In general.--In lieu of applying sections 871(b) and
882, a qualified resident of Taiwan that carries on a trade
or business within the United States through a United States
permanent establishment shall be taxable as provided in
section 1, 11, 55, or 59A, on its taxable income which is
effectively connected with such permanent establishment.
``(B) Determination of taxable income.--In determining
taxable income for purposes of paragraph (1), gross income
includes only gross income which is effectively connected
with the permanent establishment.
``(2) Treatment of dispositions of united states real
property.--In the case of a qualified resident of Taiwan,
section 897(a) shall be applied--
``(A) by substituting `carried on a trade or business
within the United States through a United States permanent
establishment' for `were engaged in a trade or business
within the United States', and
``(B) by substituting `such United States permanent
establishment' for `such trade or business'.
``(3) Treatment of branch profits taxes.--In the case of
any corporation which is a qualified resident of Taiwan,
section 884 shall be applied--
``(A) by substituting `10 percent' for `30 percent' in
subsection (a) thereof, and
``(B) by substituting `a United States permanent
establishment of a qualified resident of Taiwan' for `the
conduct of a trade or business within the United States' in
subsection (d)(1) thereof.
``(4) Special rule with respect to income derived from
certain entertainment or athletic activities.--
``(A) In general.--Paragraph (1) shall not apply to the
extent that the income is derived--
``(i) in respect of entertainment or athletic activities
performed in the United States, and
``(ii) by a qualified resident of Taiwan who is not the
entertainer or athlete performing such activities.
``(B) Exception.--Subparagraph (A) shall not apply if the
person described in subparagraph (A)(ii) is contractually
authorized to designate the individual who is to perform such
activities.
``(5) Special rule with respect to certain amounts.--
Paragraph (1) shall not apply to any income which is wages,
salaries, or similar remuneration with respect to employment
or with respect to any amount which is described in
subsection (a)(2)(B)(ii).
``(c) Qualified Resident of Taiwan.--For purposes of this
section--
``(1) In general.--The term `qualified resident of Taiwan'
means any person who--
``(A) is liable to tax under the laws of Taiwan by reason
of such person's domicile, residence, place of management,
place of incorporation, or any similar criterion,
``(B) is not a United States person (determined without
regard to paragraph (3)(E)), and
``(C) in the case of an entity taxed as a corporation in
Taiwan, meets the requirements of paragraph (2).
``(2) Limitation on benefits for corporate entities of
taiwan.--
``(A) In general.--Subject to subparagraphs (E) and (F), an
entity meets the requirements of this paragraph only if it--
``(i) meets the ownership and income requirements of
subparagraph (B),
``(ii) meets the publicly traded requirements of
subparagraph (C), or
``(iii) meets the qualified subsidiary requirements of
subparagraph (D).
``(B) Ownership and income requirements.--The requirements
of this subparagraph are met for an entity if--
``(i) at least 50 percent (by vote and value) of the total
outstanding shares of stock in such entity are owned directly
or indirectly by qualified residents of Taiwan, and
``(ii) less than 50 percent of such entity's gross income
(and in the case of an entity that is a member of a tested
group, less than 50 percent of the tested group's gross
income) is paid or accrued, directly or indirectly, in the
form of payments that are deductible for purposes of the
income taxes imposed by Taiwan, to persons who are not--
``(I) qualified residents of Taiwan, or
``(II) United States persons who meet such requirements
with respect to the United States as determined by the
Secretary to be equivalent to the requirements of this
subsection (determined without regard to paragraph (1)(B))
with respect to residents of Taiwan.
``(C) Publicly traded requirements.--An entity meets the
requirements of this subparagraph if--
``(i) the principal class of its shares (and any
disproportionate class of shares) of such entity are
primarily and regularly traded on an established securities
market in Taiwan, or
``(ii) the primary place of management and control of the
entity is in Taiwan and all classes of its outstanding shares
described in clause (i) are regularly traded on an
established securities market in Taiwan.
``(D) Qualified subsidiary requirements.--An entity meets
the requirement of this subparagraph if--
``(i) at least 50 percent (by vote and value) of the total
outstanding shares of the stock of such entity are owned
directly or indirectly by 5 or fewer entities--
``(I) which meet the requirements of subparagraph (C), or
``(II) which are United States persons the principal class
of the shares (and any disproportionate class of shares) of
which are primarily and regularly traded on an established
securities market in the United States, and
``(ii) the entity meets the requirements of clause (ii) of
subparagraph (B).
``(E) Only indirect ownership through qualifying
intermediaries counted.--
``(i) In general.--Stock in an entity owned by a person
indirectly through 1 or more other persons shall not be
treated as owned by such person in determining whether the
person meets the requirements of subparagraph (B)(i) or
(D)(i) unless all such other persons are qualifying
intermediate owners.
``(ii) Qualifying intermediate owners.--The term
`qualifying intermediate owner' means a person that is--
``(I) a qualified resident of Taiwan, or
``(II) a resident of any other foreign country (other than
a foreign country that is a foreign country of concern) that
has in effect a comprehensive convention with the United
States for the avoidance of double taxation.
``(iii) Special rule for qualified subsidiaries.--For
purposes of applying subparagraph (D)(i), the term
`qualifying intermediate owner' shall include any person who
is a United States person who meets such requirements with
respect to the United States as determined by the Secretary
to be equivalent to the requirements of this subsection
(determined without regard to paragraph (1)(B)) with respect
to residents of Taiwan.
``(F) Certain payments not included.--In determining
whether the requirements of subparagraph (B)(ii) or (D)(ii)
are met with respect to an entity, the following payments
shall not be taken into account:
[[Page H162]]
``(i) Arm's-length payments by the entity in the ordinary
course of business for services or tangible property.
``(ii) In the case of a tested group, intra-group
transactions.
``(3) Dual residents.--
``(A) Rules for determination of status.--
``(i) In general.--An individual who is an applicable dual
resident and who is described in subparagraph (B), (C), or
(D) shall be treated as a qualified resident of Taiwan.
``(ii) Applicable dual resident.--For purposes of this
paragraph, the term `applicable dual resident' means an
individual who--
``(I) is not a United States citizen,
``(II) is a resident of the United States (determined
without regard to subparagraph (E)), and
``(III) would be a qualified resident of Taiwan but for
paragraph (1)(B).
``(B) Permanent home.--An individual is described in this
subparagraph if such individual--
``(i) has a permanent home available to such individual in
Taiwan, and
``(ii) does not have a permanent home available to such
individual in the United States.
``(C) Center of vital interests.--An individual is
described in this subparagraph if--
``(i) such individual has a permanent home available to
such individual in both Taiwan and the United States, and
``(ii) such individual's personal and economic relations
(center of vital interests) are closer to Taiwan than to the
United States.
``(D) Habitual abode.--An individual is described in this
subparagraph if--
``(i) such individual--
``(I) does not have a permanent home available to such
individual in either Taiwan or the United States, or
``(II) has a permanent home available to such individual in
both Taiwan and the United States but such individual's
center of vital interests under subparagraph (C)(ii) cannot
be determined, and
``(ii) such individual has a habitual abode in Taiwan and
not the United States.
``(E) United states tax treatment of qualified resident of
taiwan.--Notwithstanding section 7701, an individual who is
treated as a qualified resident of Taiwan by reason of this
paragraph for all or any portion of a taxable year shall not
be treated as a resident of the United States for purposes of
computing such individual's United States income tax
liability for such taxable year or portion thereof.
``(4) Rules of special application.--
``(A) Dividends.--For purposes of applying this section to
any dividend, paragraph (2)(D) shall be applied without
regard to clause (ii) thereof.
``(B) Items of income emanating from an active trade or
business in taiwan.--For purposes of this section--
``(i) In general.--Notwithstanding the preceding paragraphs
of this subsection, if an entity taxed as a corporation in
Taiwan is not a qualified resident of Taiwan but meets the
requirements of subparagraphs (A) and (B) of paragraph (1),
any qualified item of income such entity derived from the
United States shall be treated as income of a qualified
resident of Taiwan.
``(ii) Qualified items of income.--
``(I) In general.--The term `qualified item of income'
means any item of income which emanates from, or is
incidental to, the conduct of an active trade or business in
Taiwan (other than operating as a holding company, providing
overall supervision or administration of a group of
companies, providing group financing, or making or managing
investments (unless such making or managing investments is
carried on by a bank, insurance company, or registered
securities dealer in the ordinary course of its business as
such)).
``(II) Substantial activity requirement.--An item of income
which is derived from a trade or business conducted in the
United States or from a connected person shall be a qualified
item of income only if the trade or business activity
conducted in Taiwan to which the item is related is
substantial in relation to the same or a complementary trade
or business activity carried on in the United States. For
purposes of applying this subclause, activities conducted by
persons that are connected to the entity described in clause
(i) shall be deemed to be conducted by such entity.
``(iii) Exception.--This subparagraph shall not apply to
any item of income derived by an entity if at least 50
percent (by vote or value) of such entity is owned (directly
or indirectly) or controlled by residents of a foreign
country of concern.
``(d) Other Definitions and Special Rules.--For purposes of
this section--
``(1) United states permanent establishment.--
``(A) In general.--The term `United States permanent
establishment' means, with respect to a qualified resident of
Taiwan, a permanent establishment of such resident which is
within the United States.
``(B) Special rule.--The determination of whether there is
a permanent establishment of a qualified resident of Taiwan
within the United States shall be made without regard to
whether an entity which is taxed as a corporation in Taiwan
and which is a qualified resident of Taiwan controls or is
controlled by--
``(i) a domestic corporation, or
``(ii) any other person that carries on business in the
United States (whether through a permanent establishment or
otherwise).
``(2) Permanent establishment.--
``(A) In general.--The term `permanent establishment' means
a fixed place of business through which a trade or business
is wholly or partly carried on. Such term shall include--
``(i) a place of management,
``(ii) a branch,
``(iii) an office,
``(iv) a factory,
``(v) a workshop, and
``(vi) a mine, an oil or gas well, a quarry, or any other
place of extraction of natural resources.
``(B) Special rules for certain temporary projects.--
``(i) In general.--A building site or construction or
installation project, or an installation or drilling rig or
ship used for the exploration or exploitation of the sea bed
and its subsoil and their natural resources, constitutes a
permanent establishment only if it lasts, or the activities
of the rig or ship lasts, for more than 12 months.
``(ii) Determination of 12-month period.--For purposes of
clause (i), the period over which a building site or
construction or installation project of a person lasts shall
include any period of more than 30 days during which such
person does not carry on activities at such building site or
construction or installation project but connected activities
are carried on at such building site or construction or
installation project by one or more connected persons.
``(C) Habitual exercise of contract authority treated as
permanent establishment.--Notwithstanding subparagraphs (A)
and (B), where a person (other than an agent of an
independent status to whom subparagraph (D)(ii) applies) is
acting on behalf of a trade or business of a qualified
resident of Taiwan and has and habitually exercises an
authority to conclude contracts that are binding on the trade
or business, that trade or business shall be deemed to have a
permanent establishment in the country in which such
authority is exercised in respect of any activities that the
person undertakes for the trade or business, unless the
activities of such person are limited to those described in
subparagraph (D)(i) that, if exercised through a fixed place
of business, would not make this fixed place of business a
permanent establishment under the provisions of that
subparagraph.
``(D) Exclusions.--
``(i) In general.--Notwithstanding subparagraphs (A) and
(B), the term `permanent establishment' shall not include--
``(I) the use of facilities solely for the purpose of
storage, display, or delivery of goods or merchandise
belonging to the trade or business,
``(II) the maintenance of a stock of goods or merchandise
belonging to the trade or business solely for the purpose of
storage, display, or delivery,
``(III) the maintenance of a stock of goods or merchandise
belonging to the trade or business solely for the purpose of
processing by another trade or business,
``(IV) the maintenance of a fixed place of business solely
for the purpose of purchasing goods or merchandise, or of
collecting information, for the trade or business,
``(V) the maintenance of a fixed place of business solely
for the purpose of carrying on, for the trade or business,
any other activity of a preparatory or auxiliary character,
or
``(VI) the maintenance of a fixed place of business solely
for any combination of the activities mentioned in subclauses
(I) through (V), provided that the overall activity of the
fixed place of business resulting from this combination is of
a preparatory or auxiliary character.
``(ii) Brokers and other independent agents.--A trade or
business shall not be considered to have a permanent
establishment in a country merely because it carries on
business in such country through a broker, general commission
agent, or any other agent of an independent status, provided
that such persons are acting in the ordinary course of their
business as independent agents.
``(3) Tested group.--The term `tested group' includes, with
respect to any entity taxed as a corporation in Taiwan, such
entity and any other entity taxed as a corporation in Taiwan
that--
``(A) participates as a member with such entity in a tax
consolidation, fiscal unity, or similar regime that requires
members of the group to share profits or losses, or
``(B) shares losses with such entity pursuant to a group
relief or other loss sharing regime.
``(4) Connected person.--Two persons shall be `connected
persons' if one owns, directly or indirectly, at least 50
percent of the interests in the other (or, in the case of a
corporation, at least 50 percent of the aggregate vote and
value of the corporation's shares) or another person owns,
directly or indirectly, at least 50 percent of the interests
(or, in the case of a corporation, at least 50 percent of the
aggregate vote and value of the corporation's shares) in each
person. In any case, a person shall be connected to another
if, based on all the relevant facts and circumstances, one
has control of the other or both are under the control of the
same person or persons.
``(5) Foreign country of concern.--The term `foreign
country of concern' has the meaning given such term under
paragraph (7) of section 9901 of the William M. (Mac)
Thornberry National Defense Authorization
[[Page H163]]
Act for Fiscal Year 2021 (15 U.S.C. 4651(7)), as added by
section 103(a)(4) of the CHIPS Act of 2022).
``(6) Partnerships; beneficiaries of estates and trusts.--
For purposes of this section--
``(A) a qualified resident of Taiwan which is a partner of
a partnership which carries on a trade or business within the
United States through a United States permanent establishment
shall be treated as carrying on such trade or business
through such permanent establishment, and
``(B) a qualified resident of Taiwan which is a beneficiary
of an estate or trust which carries on a trade or business
within the United States through a United States permanent
establishment shall be treated as carrying on such trade or
business through such permanent establishment.
``(7) Denial of benefits for certain payments through
hybrid entities.--For purposes of this section, rules similar
to the rules of section 894(c) shall apply.
``(e) Application.--
``(1) In general.--This section shall not apply to any
period unless the Secretary has determined that Taiwan has
provided benefits to United States persons for such period
that are reciprocal to the benefits provided to qualified
residents of Taiwan under this section.
``(2) Provision of reciprocity.--The President or his
designee is authorized to exchange letters, enter into an
agreement, or take other necessary and appropriate steps
relative to Taiwan for the reciprocal provision of the
benefits described in this section.
``(f) Regulations or Other Guidance.--
``(1) In general.--The Secretary shall issue such
regulations or other guidance as may be necessary or
appropriate to carry out the provisions of this section,
including such regulations or guidance for--
``(A) determining--
``(i) what constitutes a United States permanent
establishment of a qualified resident of Taiwan, and
``(ii) income that is effectively connected with such a
permanent establishment,
``(B) preventing the abuse of the provisions of this
section by persons who are not (or who should not be treated
as) qualified residents of Taiwan,
``(C) requirements for record keeping and reporting,
``(D) rules to assist withholding agents or employers in
determining whether a foreign person is a qualified resident
of Taiwan for purposes of determining whether withholding or
reporting is required for a payment (and, if withholding is
required, whether it should be applied at a reduced rate),
``(E) the application of subsection (a)(1)(D)(i) to stock
held by predecessor owners,
``(F) determining what amounts are to be treated as
qualified wages for purposes of subsection (a)(2),
``(G) determining the amounts to which subsection (a)(3)
applies,
``(H) defining established securities market for purposes
of subsection (c),
``(I) the application of the rules of subsection (c)(4)(B),
``(J) the application of subsection (d)(6) and section
1446,
``(K) determining ownership interests held by residents of
a foreign country of concern, and
``(L) determining the starting and ending dates for periods
with respect to the application of this section under
subsection (e), which may be separate dates for taxes
withheld at the source and other taxes.
``(2) Regulations to be consistent with model treaty.--Any
regulations or other guidance issued under this section
shall, to the extent practical, be consistent with the
provisions of the United States model income tax convention
dated February 7, 2016.''.
(b) Conforming Amendment to Withholding Tax.--Subchapter A
of chapter 3 of the Internal Revenue Code of 1986 is amended
by adding at the end the following new section:
``SEC. 1447. WITHHOLDING FOR QUALIFIED RESIDENTS OF TAIWAN.
``For reduced rates of withholding for certain residents of
Taiwan, see section 894A.''.
(c) Clerical Amendments.--
(1) The table of sections for subpart D of part II of
subchapter N of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after the item relating to
section 894 the following new item:
``Sec. 894A. Special rules for qualified residents of Taiwan.''.
(2) The table of sections for subchapter A of chapter 3 of
such Code is amended by adding at the end the following new
item:
``Sec. 1447. Withholding for qualified residents of Taiwan.''.
TITLE II--UNITED STATES-TAIWAN TAX AGREEMENT AUTHORIZATION ACT
SEC. 201. SHORT TITLE.
This title may be cited as the ``United States-Taiwan Tax
Agreement Authorization Act''.
SEC. 202. DEFINITIONS.
In this title:
(1) Agreement.--The term ``Agreement'' means the tax
agreement authorized by section 203(a).
(2) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Foreign Relations and the Committee on
Finance of the Senate; and
(B) the Committee on Ways and Means of the House of
Representatives.
(3) Approval legislation.--The term ``approval
legislation'' means legislation that approves the Agreement.
(4) Implementing legislation.--The term ``implementing
legislation'' means legislation that makes any changes to the
Internal Revenue Code of 1986 necessary to implement the
Agreement.
SEC. 203. AUTHORIZATION TO NEGOTIATE AND ENTER INTO
AGREEMENT.
(a) In General.--Subsequent to a determination under
section 894A(e)(1) of the Internal Revenue Code of 1986 (as
added by the United States-Taiwan Expedited Double-Tax Relief
Act), the President is authorized to negotiate and enter into
a tax agreement relative to Taiwan.
(b) Elements of Agreement.--
(1) Conformity with bilateral income tax conventions.--The
President shall ensure that--
(A) any provisions included in the Agreement conform with
provisions customarily contained in United States bilateral
income tax conventions, as exemplified by the 2016 United
States Model Income Tax Convention; and
(B) the Agreement does not include elements outside the
scope of the 2016 United States Model Income Tax Convention.
(2) Incorporation of tax agreements and laws.--
Notwithstanding paragraph (1), the Agreement may incorporate
and restate provisions of any agreement, or existing United
States law, addressing double taxation for residents of the
United States and Taiwan.
(3) Authority.--The Agreement shall include the following
statement: ``The Agreement is entered into pursuant to the
United States-Taiwan Tax Agreement Authorization Act.''
(4) Entry into force.--The Agreement shall include a
provision conditioning entry into force upon--
(A) enactment of approval legislation and implementing
legislation pursuant to section 207; and
(B) confirmation by the Secretary of the Treasury that the
relevant authority in Taiwan has approved and taken
appropriate steps required to implement the Agreement.
SEC. 204. CONSULTATIONS WITH CONGRESS.
(a) Notification Upon Commencement of Negotiations.--The
President shall provide written notification to the
appropriate congressional committees of the commencement of
negotiations between the United States and Taiwan on the
Agreement at least 15 calendar days before commencing such
negotiations.
(b) Consultations During Negotiations.--
(1) Briefings.--Not later than 90 days after commencement
of negotiations with respect to the Agreement, and every 180
days thereafter until the President enters into the
Agreement, the President shall provide a briefing to the
appropriate congressional committees on the status of the
negotiations, including a description of elements under
negotiation.
(2) Meetings and other consultations.--
(A) In general.--In the course of negotiations with respect
to the Agreement, the Secretary of the Treasury, in
coordination with the Secretary of State, shall--
(i) meet, upon request, with the chairman or ranking member
of any of the appropriate congressional committees regarding
negotiating objectives and the status of negotiations in
progress; and
(ii) consult closely and on a timely basis with, and keep
fully apprised of the negotiations, the appropriate
congressional committees.
(B) Elements of consultations.--The consultations described
in subparagraph (A) shall include consultations with respect
to--
(i) the nature of the contemplated Agreement;
(ii) how and to what extent the contemplated Agreement is
consistent with the elements set forth in section 203(b); and
(iii) the implementation of the contemplated Agreement,
including--
(I) the general effect of the contemplated Agreement on
existing laws;
(II) proposed changes to any existing laws to implement the
contemplated Agreement; and
(III) proposed administrative actions to implement the
contemplated Agreement.
SEC. 205. APPROVAL AND IMPLEMENTATION OF AGREEMENT.
(a) In General.--The Agreement may not enter into force
unless--
(1) the President, at least 60 days before the day on which
the President enters into the Agreement, publishes the text
of the contemplated Agreement on a publicly available website
of the Department of the Treasury; and
(2) there is enacted into law, with respect to the
Agreement, approval legislation and implementing legislation
pursuant to section 207.
(b) Entry Into Force.--The President may provide for the
Agreement to enter into force upon--
(1) enactment of approval legislation and implementing
legislation pursuant to section 207; and
(2) confirmation by the Secretary of the Treasury that the
relevant authority in Taiwan has approved and taken
appropriate steps required to implement the Agreement.
[[Page H164]]
SEC. 206. SUBMISSION TO CONGRESS OF AGREEMENT AND
IMPLEMENTATION POLICY.
(a) Submission of Agreement.--Not later than 270 days after
the President enters into the Agreement, the President or the
President's designee shall submit to Congress--
(1) the final text of the Agreement; and
(2) a technical explanation of the Agreement.
(b) Submission of Implementation Policy.--Not later than
270 days after the President enters into the Agreement, the
Secretary of the Treasury shall submit to Congress--
(1) a description of those changes to existing laws that
the President considers would be required in order to ensure
that the United States acts in a manner consistent with the
Agreement; and
(2) a statement of anticipated administrative action
proposed to implement the Agreement.
SEC. 207. CONSIDERATION OF APPROVAL LEGISLATION AND
IMPLEMENTING LEGISLATION.
(a) In General.--The approval legislation with respect to
the Agreement shall include the following: ``Congress
approves the Agreement submitted to Congress pursuant to
section 206 of the United States-Taiwan Tax Agreement
Authorization Act on ____.'', with the blank space being
filled with the appropriate date.
(b) Approval Legislation Committee Referral.--The approval
legislation shall--
(1) in the Senate, be referred to the Committee on Foreign
Relations; and
(2) in the House of Representaives, be referred to the
Committee on Ways and Means.
(c) Implementing Legislation Committee Referral.--The
implementing legislation shall--
(1) in the Senate, be referred to the Committee on Finance;
and
(2) in the House of Representatives, be referred to the
Committee on Ways and Means.
SEC. 208. RELATIONSHIP OF AGREEMENT TO INTERNAL REVENUE CODE
OF 1986.
(a) Internal Revenue Code of 1986 to Control.--No provision
of the Agreement or approval legislation, nor the application
of any such provision to any person or circumstance, which is
inconsistent with any provision of the Internal Revenue Code
of 1986, shall have effect.
(b) Construction.--Nothing in this title shall be
construed--
(1) to amend or modify any law of the United States; or
(2) to limit any authority conferred under any law of the
United States,
unless specifically provided for in this title.
SEC. 209. AUTHORIZATION OF SUBSEQUENT TAX AGREEMENTS RELATIVE
TO TAIWAN.
(a) In General.--Subsequent to the enactment of approval
legislation and implementing legislation pursuant to section
207--
(1) the term ``tax agreement'' in section 203(a) shall be
treated as including any tax agreement relative to Taiwan
which supplements or supersedes the Agreement to which such
approval legislation and implementing legislation relates,
and
(2) the term ``Agreement'' shall be treated as including
such tax agreement.
(b) Requirements, etc., to Apply Separately.--The
provisions of this title (including section 204) shall be
applied separately with respect to each tax agreement
referred to in subsection (a).
SEC. 210. UNITED STATES TREATMENT OF DOUBLE TAXATION MATTERS
WITH RESPECT TO TAIWAN.
(a) Findings.--Congress makes the following findings:
(1) The United States addresses issues with respect to
double taxation with foreign countries by entering into
bilateral income tax conventions (known as tax treaties) with
such countries, subject to the advice and consent of the
Senate to ratification pursuant to article II of the
Constitution.
(2) The United States has entered into more than sixty such
tax treaties, which facilitate economic activity, strengthen
bilateral cooperation, and benefit United States workers,
businesses, and other United States taxpayers.
(3) Due to Taiwan's unique status, the United States is
unable to enter into an article II tax treaty with Taiwan,
necessitating an agreement to address issues with respect to
double taxation.
(b) Statement of Policy.--It is the policy of the United
States to--
(1) provide for additional bilateral tax relief with
respect to Taiwan, beyond that provided for in section 894A
of the Internal Revenue Code of 1986 (as added by the United
States-Taiwan Expedited Double-Tax Relief Act), only after
entry into force of an Agreement, as provided for in section
205, and only in a manner consistent with such Agreement; and
(2) continue to provide for bilateral tax relief with
sovereign states to address double taxation and other related
matters through entering into bilateral income tax
conventions, subject to the Senate's advice and consent to
ratification pursuant to article II of the Constitution.
The SPEAKER pro tempore. The bill shall be debatable for 1 hour,
equally divided and controlled by the majority leader and the minority
leader, or their respective designees.
The gentleman from Missouri (Mr. Smith) and the gentlewoman from
California (Ms. Chu) each will control 30 minutes.
The Chair recognizes the gentleman from Missouri.
Mr. SMITH of Missouri. Mr. Speaker, I ask unanimous consent that all
Members have 5 legislative days to revise and extend their remarks and
submit extraneous material on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Missouri?
There was no objection.
Mr. SMITH of Missouri. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in strong support of the United States-Taiwan
Expedited Double-Tax Relief Act, bipartisan legislation that will
unleash more American manufacturing investment and jobs and help combat
China's harmful influence.
For too long, America has been too dependent on China. It comes at a
high price, as communities across this country lose jobs and live with
little hope for the future. It also puts America's national security at
risk.
This bill before us establishes fair tax treatment for both American
workers and businesses operating in Taiwan and puts Americans on equal
footing with our competitors around the world.
Enacting this legislation will help create jobs right here at home.
U.S. exports to Taiwan support 188,000 American jobs, and Taiwanese
investment in the United States supports another 21,000. Reducing
burdens on Taiwanese investment in America will help aid in building
new cutting-edge manufacturing plants staffed by American workers. It
will help support our domestic semiconductor and chip manufacturing
capabilities, securing strategic supply chains and helping us further
move away from China.
Citizens and companies from countries like Great Britain, Japan,
Australia, and New Zealand and the European Union all enjoy better tax
treatment than Americans in Taiwan currently do. That is not right. In
fact, the United States is Taiwan's largest trading partner without a
tax treaty.
Enhancing our relationship with Taiwan will strengthen the U.S.
economy and our national security. Instead of leaving critical supply
chains in the hands of the Chinese Communist Party, we need to be
making more goods in America, or in partnership with allies like Taiwan
that share our interests, to reduce our dependence on China.
This legislation has strong bipartisan support. Last Congress, we
took action in authorizing and establishing the first steps in a free
trade agreement between the U.S. and Taiwan. As we continue to grow our
economic relationship together, a tax treaty represents the logical
next move. Advancing this legislation to President Trump's desk is the
right thing to do for American workers and our economy as a whole.
I thank Ranking Member Neal for helping lead this effort and
introducing this legislation with me. Today, we are showing the world
that American leaders are united in standing up for our workers and
businesses.
Mr. Speaker, I urge all of my colleagues to support this bill to help
critical American manufacturing sectors and to protect our national and
economic security, and I reserve the balance of my time.
Ms. CHU. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in strong support of H.R. 33, the United States-
Taiwan Expedited Double-Tax Relief Act. I thank Ranking Member Neal and
Chairman Smith for working on this significant legislation, which was
reported out of the Ways and Means Committee unanimously last Congress.
I also thank Representative Suzan DelBene as well as Representatives
Adrian Smith and Nicole Malliotakis for their partnership. Together, we
introduced a resolution last Congress calling to advance legislation to
address that barrier, the issue of double taxation on income earned in
the United States and Taiwan.
Today, Americans who do business in Taiwan, and those from Taiwan who
do business from America, must pay income tax in both places on the
same earnings. That hurts businesses of all sizes, as well as
individuals who spend time in each market.
For example, without a double-tax treaty, workers from the United
States who are sent to Taiwan to train for
[[Page H165]]
their jobs in a domestic chip facility can be taxed twice on the income
they earn on that trip.
The U.S. has eliminated this problem through bilateral income tax
treaties with more than 60 countries, but not with Taiwan. That is
because of its unique political status which prevents us from
negotiating a traditional tax treaty. As a result, among our top 10
trading partners, only Taiwan lacks a double-tax agreement.
We should forge an agreement both because Taiwan is a leading
democracy in Asia and because their investment in the United States
supports at least 188,000 American jobs, including many in my southern
California district, which is home to one of the largest communities of
people from Taiwan in the U.S.
In 2023, I met with some of them here in Washington, D.C., to discuss
the barrier posed by this double taxation. They told me stories of
facing huge tax bills after doing business in both markets and having
to curtail their cross-border investment as a result.
The American Institute in Taiwan conducted a survey of Taiwanese
companies with a presence here in the United States, and 79 percent of
them reported that double taxation of income is a considerable factor
that prevents them from investing more in the U.S.
There is a solution, which is the legislation before us today.
Specifically, this bill reduces the withholding of taxes and lays the
groundwork for the Treasury Department to finalize the details of
a permanent arrangement, based on the model income tax treaty that we
have with scores of other countries, to mitigate double taxation,
prevent abuse, allow for dispute resolution, and exchange key tax
information that will help revenue authorities in both jurisdictions.
This bill would ensure that our Nation can take full advantage of the
historic investments that we have made under the Biden-Harris
administration, like the bipartisan CHIPS and Science Act. Because of
that law, new chip fabs are under construction in places like Ohio and
operational and producing chips in Arizona, but these factories are
enormously complicated and expensive. Even with the billions of dollars
in investments from the Department of Commerce, the math simply might
not pencil out for a project if the company will be subject to double
taxation as soon as they turn a profit.
From major chip companies to small businesses in southern California
and across the country, it is clear that mitigating double taxation
between the U.S. and Taiwan is crucial. It will only become more
important as Congress continues to work in a bipartisan manner to
strengthen our economic relations with Taiwan.
Last Congress, we approved the first phase of the U.S.-Taiwan
Initiative on 21st Century Trade negotiated by USTR and TECRO, and I
have expressed my support for going even further and negotiating a
comprehensive bilateral trade agreement with Taiwan.
To unlock the benefits made possible by our strengthening
partnership, we must ensure that businesses are not at a competitive
disadvantage.
Mr. Speaker, I reserve the balance of my time.
Mr. SMITH of Missouri. Mr. Speaker, I yield such time as he may
consume to the gentleman from Pennsylvania (Mr. Kelly), who is the
chairman of the Tax Subcommittee.
Mr. KELLY of Pennsylvania. Mr. Speaker, I rise today in support of
H.R. 33, the United States-Taiwan Expedited Double-Tax Relief Act.
This bill would be the first step in establishing an informal tax
treaty with our ally Taiwan. Currently, Taiwan is our largest trading
partner without a tax treaty. Through fair and reciprocal tax
treatment, H.R. 33 would deepen our economic relationship with Taiwan,
specifically our semiconductor and chip manufacturing industries, and
secure strategic supply chains.
America should not have to rely on foreign adversaries like China for
our supply chains when we can partner with better allies like Taiwan.
If we have learned anything from the pandemic, it is that we cannot
rely on people who do not feel the same as we do to supply us with
needed products.
As conflicts continue to rise across the globe, we must build our
relationships with strong democracies like Taiwan. In recent years, we
have watched China strengthen trade ties with nations across the globe,
including American adversaries Iran and North Korea. China is also
expanding its influence throughout the Western Hemisphere.
The Monroe Doctrine and the Roosevelt Corollary stated very clearly
back at the turn of the century what could happen from the 1800s going
to the 2000s. When you look at what is happening now, Mr. Speaker,
China is now at both ends of our Panama Canal. As you follow that 51
miles of the Panama Canal, China is on both sides of the canal. They
are saying that, no, we don't understand and that this is just for
trade. Mr. Speaker, this can quickly be converted into something else.
As President Trump and I recently noted, the Panama Canal is a vital
trade global route that includes 40 percent of all U.S. container
shipping. At some point, America must wake up to what is happening. We
cannot rely on an adversary to supply us with needed goods, and then
they make the decision of what they will send us and what they will not
send us.
Our ally is Taiwan, and we need to have a stronger tie with them.
Mr. Speaker, I thank Chairman Smith for sponsoring this critical
piece of legislation. All of my colleagues from Ways and Means are here
to talk on the same subject, and we will continue this work. I think,
as we go into the 21st day of January, we will see this incredible
movement toward making America great again.
I thank, again, Chairman Smith for sponsoring this, my Ways and Means
colleagues for their continuous work, and Speaker Johnson for bringing
this bill to the floor. I look forward to working with the Senate and
President-elect Trump to get the bill signed into law.
{time} 1315
Ms. CHU. Mr. Speaker, I yield 2 minutes to the gentleman from
Illinois (Mr. Davis).
Mr. DAVIS of Illinois. Mr. Speaker, I thank the gentlewoman for
yielding.
Mr. Speaker, I rise in support of H.R. 33, the United States-Taiwan
Expedited Double-Tax Relief Act. This bill represents a bilateral tax
agreement that prevents doubling taxation on U.S. and Taiwanese
businesses and workers.
This bill helps promote Taiwanese investment in the United States and
job creation. The bill provides benefits to Taiwanese residents similar
to those provided in the 2016 U.S. model tax treaty.
Importantly, these new provisions do not take effect until Taiwan
offers American residents the same benefits. The bill, H.R. 33, would
strengthen trade relations, increase manufacturing production, boost
innovation, create economic growth for the U.S. and Taiwan, and allow
our country to compete more effectively with China by increasing trade
and business commerce in both goods and services.
Mr. Speaker, I encourage all of my colleagues to vote ``yes'' for
H.R. 33. It is good for Americans, as well as Taiwanese, and good for
both countries.
Mr. SMITH of Missouri. Mr. Speaker, I yield such time as he may
consume to the gentleman from Illinois (Mr. LaHood), the chair of the
Work and Welfare Subcommittee.
Mr. LaHOOD. Mr. Speaker, I thank the chairman for his leadership on
this bill.
Mr. Speaker, I rise today in strong support of the United States-
Taiwan Expedited Double-Tax Relief Act.
In today's global economy, it is customary for the United States to
enter into tax treaties with like-minded allies to lessen potential
double-tax burdens and encourage cross-border investment.
The United States currently has tax agreements with over 60 foreign
tax jurisdictions. Yet, due to its unique political status, even as our
seventh largest trading partner, we do not have a formal tax
arrangement in place with Taiwan.
This bipartisan legislation before us today would finally change
that. This bill makes necessary changes to our tax code to provide
much-needed certainty to businesses and workers between our two
countries.
As a member of both the Ways and Means Trade Subcommittee and our
Select Committee on the Strategic Competition Between the United States
and the Chinese Communist Party, I know how important our relationship
with Taiwan is, both in terms of trade and national security.
[[Page H166]]
This bill will open the door for us to continue to develop a strong
economic partnership, especially in the technology and semiconductor
sectors, and help the United States reduce our reliance on China.
Mr. Speaker, I thank the chairman, Speaker Johnson, and all the
members of the Ways and Means Committee for bringing this legislation
to the floor today.
Ms. CHU. Mr. Speaker, I yield 5 minutes to the gentleman from
California (Mr. Panetta).
Mr. PANETTA. Mr. Speaker, I thank the gentlewoman for yielding, and I
thank the chairman for bringing this bill to the floor.
Mr. Speaker, I rise today to support the United States-Taiwan
Expedited Double-Tax Relief Act.
This is a bipartisan bill that would address the issue of double
taxation between Taiwan and the United States. That is an issue that
has long impaired our mutual investment opportunities, including the
ability of the United States to shore up the semiconductor supply chain
and fully capitalize on the potential of our partnership with Taiwan.
Mr. Speaker, I don't need to remind my colleagues of the security
challenges that we faced during the pandemic, when we dealt with the
overwhelming supply chain issues, especially for semiconductor chips.
That shortage led to sky-high prices for everyday items, and it
impacted critical industries in healthcare, defense, and the technology
sector.
What we quickly realized is that one of the ways that we can prevent
such shortages is to partner with trusted producers like Taiwan and
increase mutual investment that can lead to supply chain security.
However, that type of investment that is needed for this type of
partnership is hard to do when there is double taxation. It simply
won't happen when income is taxed in the country where it is earned and
then taxed again when it is repatriated back to its home country.
That is just not a recipe for investment, for partnership, for
success, and for our security. That is why we need to pass this
legislation that allows us to enter into a treaty with Taiwan that
limits that type of double taxation.
Mr. Speaker, as was just heard from my colleague from Illinois (Mr.
LaHood), Taiwan is the seventh largest trading partner of the United
States, yet it is also the largest trading partner without this type of
tax agreement.
During both of my two visits to Taiwan last year, this issue came up
with President Lai in that he said to our delegation: This is a way to
improve our economies and our security.
He knows and we know that the Taiwanese companies that are investing
in semiconductor facilities right here in America and are helping
fulfill the objectives of the CHIPS and Science Act need the tax relief
and regulation clarity now more than ever.
The bipartisan legislation that we are considering today would
address this issue by setting a framework for such a treaty, reducing
tax withholding rates, and providing clear guidelines for what is
taxed, who is taxed, and when it is taxed.
Putting it simply, Mr. Speaker, it would establish clarity and
certainty by ending double taxation, encouraging investment, and
strengthening our economic partnership.
Mr. Speaker, despite the policy of strategic ambiguity when it comes
to the defense of Taiwan, what is clear is that the United States
supports the people of Taiwan and a strong economic partnership with
Taiwan with this bipartisan legislation that ultimately bolsters our
stability, our prosperity, and the security of both of our great
nations.
Mr. SMITH of Missouri. Mr. Speaker, I yield such time as she may
consume to the gentlewoman from West Virginia (Mrs. Miller).
Mrs. MILLER of West Virginia. Mr. Speaker, I thank Chairman Smith for
yielding me time.
Mr. Speaker, I rise today in support of H.R. 33. Taiwan and the
United States have a long and productive relationship. Last fall, I had
the opportunity to visit Taipei and learn about the robust investments
Taiwan is making right there in semiconductor manufacturing. Taiwanese
companies are also making large investments right here in the United
States.
Ending double taxation between our two countries will be beneficial
to both the American businesses in Taiwan and the Taiwanese businesses
investing in the United States. I deeply value our continued
partnership with our ally Taiwan, and I know that this bill will go a
long way to secure our economic relationship for years to come.
As a member of the Trade Subcommittee, ensuring mutually beneficial
relationships with our allies is very important to me. Of course, being
a West Virginian, I always welcome our friends from Taiwan to come
visit our beautiful State.
Ms. CHU. Mr. Speaker, I yield 2 minutes to the gentlewoman from the
Virgin Islands (Ms. Plaskett).
Ms. PLASKETT. Mr. Speaker, I rise today in support of H.R. 33.
This legislation, supported by the Biden-Harris administration, is an
opportunity for the United States to strengthen its economic ties with
Taiwan. H.R. 33 creates a new section within the tax code to facilitate
mutual investment from the United States into Taiwan and vice versa by
reducing double taxation traps for Taiwanese residents with income from
sources within the United States.
By removing these traps, H.R. 33 facilitates the creation of a strong
domestic semiconductor ecosystem, creates jobs, and incentivizes
investments in semiconductor technology and our American economy.
Securing our Nation's position at the forefront of the chip
manufacturing race is possible only if we constantly work to remove the
barriers to developing American manufacturing, both in our tax code and
regulatory environment.
The United States and Taiwan have long shared a strong economic
partnership powered by extensive two-way trade, and we must ensure that
this partnership remains robust. It is critical that we work to improve
our existing trade agreement with Taiwan and ensure that future trade
agreements continue to facilitate the development of domestic American
manufacturing.
As elected officials, it is our responsibility to ensure the tax code
works for the benefit of all. Supporting H.R. 33 makes certain that our
tax code reflects the values of fairness and trust.
As a member of the Intelligence Committee in the 118th Congress, I
can tell my colleagues that this increased trade, both in the Pacific
and viewed throughout the world, is helpful to America's strength.
Mr. SMITH of Missouri. Mr. Speaker, I yield such time as he may
consume to the gentleman from Oklahoma (Mr. Hern).
Mr. HERN of Oklahoma. Mr. Speaker, I thank the chairman for yielding
me time.
Mr. Speaker, combating the CCP's malign influence across the globe
demands strong partnerships and a steady backbone. Our partnership with
Taiwan is critical to that goal.
In 2023, I led a delegation to Taiwan, where we met with former
President Tsai and current President Lai. We saw firsthand the
importance of the economic partnership between our great nations, a
partnership meaningful not only in economic terms, but in the true
friendship and goodwill we share, as well as our common values. Taiwan
is fighting for the very thing that our Founding Fathers did: freedom
and opportunity.
Taiwan does not ask for our support without bringing their own
strengths to the table. They have increased investment in domestic
research and development to improve their own deterrence capabilities
and are invested heavily in the semiconductor industry here in the
United States of America.
Unfortunately, without a formal tax treaty with Taiwan, double
taxation is deterring further Taiwanese investments in the United
States. This unique issue requires a unique solution. H.R. 33 will
alleviate the double taxation burden and, in turn, bolster the U.S.
supply chain.
Mr. Speaker, I am proud to support H.R. 33 today, and I urge all of
my colleagues to vote ``yes.''
Ms. CHU. Mr. Speaker, I yield 1 minute to the gentleman from
Massachusetts (Mr. Auchincloss).
Mr. AUCHINCLOSS. Mr. Speaker, I rise today in support of H.R. 33, the
United States-Taiwan Expedited Double-Tax Relief Act.
This bill codifies the strong partnership between the United States
and
[[Page H167]]
Taiwan by granting benefits to Taiwan's residents that invest in the
United States without the undue burden of additional taxation.
Taiwan's vibrant democracy and strong economy represent opportunity
in the Indo-Pacific. In 2024, the United States was Taiwan's largest
destination for its direct foreign investment, totaling more than $14
billion.
To date, the United States has signed double taxation agreements with
over 60 countries, including the People's Republic of China. It does
not have one with Taiwan. The scope and severity of the threat from the
Chinese Communist Party is crystallized in the Taiwan Strait, which is
under constant harassment.
The United States and Taiwan should help support each other's
democracies through collaboration on countering disinformation and
propaganda. We should go further to strengthen one another's economies
through increased flows of trade and investment by negotiating expanded
market access, common rules, and the end of this double taxation on
Taiwanese investment in the United States. This is especially critical
as we look to revive U.S. semiconductor manufacturing.
The SPEAKER pro tempore. The time of the gentleman has expired.
Ms. CHU. Mr. Speaker, I yield an additional 30 seconds to the
gentleman from Massachusetts.
Mr. AUCHINCLOSS. Mr. Speaker, as the United States seeks to
strengthen our position in the Indo-Pacific, let us commit to Taiwan as
a long-term ally.
Mr. SMITH of Missouri. Mr. Speaker, I yield such time as he may
consume to the gentleman from Texas (Mr. Moran), one of our newest
members of the Ways and Means Committee.
Mr. MORAN. Mr. Speaker, I rise in strong support of the United
States-Taiwan Expedited Double-Tax Relief Act.
Taiwanese companies in America, including those in critical
semiconductor sectors, face double tax burdens due to the lack of a
U.S.-Taiwan tax agreement.
Taiwan is one of our largest trading partners without such a treaty,
yet it supports more than 22,000 U.S. jobs and contributed $185 million
to U.S. research in 2021.
This bill addresses these issues by eliminating double taxation,
reducing withholding tax rates, and clarifying residency rules. It
strengthens our economic alliance with Taiwan, ensuring a reliable
supply chain for semiconductors and reducing dependence on China and
our adversaries.
In my home State of Texas, Taiwanese tech companies are investing
billions in advanced manufacturing, but double taxation threatens their
ability to operate effectively. Today's bipartisan bill equips us to
expand cross-border investment, safeguard critical supply chains, and
push back against China's growing influence.
Without this legislation, we will risk alienating Taiwan, one of our
strongest partners in the Indo-Pacific region. We also risk ceding more
power to China in the Taiwan Strait and isolating ourselves further on
the global economic stage. That is simply unacceptable.
This bill is critical to reaffirming our commitment to economic
growth, national security, and the U.S.-Taiwan partnership.
Mr. Speaker, I urge my colleagues in Congress to support this vital
legislation to do just that.
Ms. CHU. Mr. Speaker, I yield 2 minutes to the gentleman from
California (Mr. Min).
Mr. MIN. Mr. Speaker, I was just elected to represent California's
47th Congressional District in the heart of Orange County, and we have
quite a sizeable Chinese-American population.
I have spoken with many constituents who are deeply concerned about
the future of Taiwan, particularly in the face of increased aggression
and a lot of rhetoric.
Mr. Speaker, I think it is important that we signal here that we are
strengthening the relationship between our two countries.
For the past 75 years, the United States and Taiwan have enjoyed a
special relationship, one rooted in our shared values of freedom and
democracy.
{time} 1330
That has also been bolstered by a strong national security
relationship founded on Ronald Reagan's Six Assurances to Taiwan. Of
course, we have had a strong economic relationship based on a lot of
mutual trade and investment, including around semiconductor chips and
other critical goods.
Now, this is the seventh largest trading partner of the United
States. It is a large trading partner of my State of California. I
think it is important we end this regime of double taxation, continue
strengthening our ties, encouraging more economic investments, and
ensuring that we are bolstering our national security.
Mr. Speaker, I urge my colleagues to vote ``aye.''
Mr. SMITH of Missouri. Mr. Speaker, I yield such time as he may
consume to the gentleman from Florida (Mr. Bean), one of the newest
members to the Ways and Means Committee.
Mr. BEAN of Florida. Mr. Speaker, I thank Chairman Smith for
yielding.
Mr. Speaker, standing up to the Chinese Communist Party is a no-
brainer, and standing up to Communist China means standing with Taiwan.
Mr. Speaker, Taiwan's security and economic prosperity are important
to the United States and the rest of the world. Why? That is because if
anything were to happen to Taiwan, the effect on the global economy
would be devastating.
Here are the numbers: Taiwan is the United States' 7th largest
trading partner, 10th largest export market, and 8th largest source of
imports. Taiwan is the biggest trading partner without a deal with the
United States.
Today, Taiwan is and will remain one of our most strategic partners
and allies in the region. This is not only because of our shared values
of democracy, peace, and freedom, but also our economic ties.
As Communist China continues to threaten America's interests, we must
do all we can to strengthen our partnership with Taiwan. That is why,
Mr. Speaker, we need H.R. 33, the United States-Taiwan Expedited
Double-Tax Relief Act.
Mr. Speaker, I urge my colleagues to stand with me and support my
friend from Missouri, Chairman Jason Smith, and his timely bill to
strengthen our economic ties with Taiwan and empower Americans doing
business in the country.
The correct answer on H.R. 33 is a ``yes'' vote.
Mr. Speaker, this bill makes it clear that the United States stands
with our economic ally and supports a strong and prosperous Taiwan.
Ms. CHU. Mr. Speaker, I reserve the balance of my time.
Mr. SMITH of Missouri. Mr. Speaker, I yield such time as he may
consume to the gentleman from Indiana (Mr. Yakym), another new member
of the Ways and Means Committee.
Mr. YAKYM. Mr. Speaker, I rise in strong support of the United
States-Taiwan Expedited Double-Tax Relief Act.
The EU, U.K., Japan, Australia, and New Zealand are among the
countries that have a tax treaty with Taiwan. The U.S. is not one of
them. In fact, Taiwan is our largest trading partner and ally that
isn't covered by a tax treaty.
This puts American companies and citizens at a competitive
disadvantage. The bill before us would level the playing field. It
would incentivize Taiwan to provide tax benefits to Americans that are
similar to those of a tax treaty. Once Taiwan has done so, the United
States would provide those same benefits to Taiwan.
Taiwan is a key partner in derisking our supply chains away from
China. Taiwanese investment already supports 21,000 American jobs, and
over $1.5 billion in American exports. Reducing double taxation will
strengthen our partnership, increase bilateral investment, and create
jobs.
Mr. Speaker, I thank Chairman Smith and Ranking Member Neal for their
leadership on this issue. I urge my colleagues to support this bill.
Ms. CHU. Mr. Speaker, I reserve the balance of my time.
Mr. SMITH of Missouri. Mr. Speaker, I yield such time as he may
consume to the gentleman from Nebraska (Mr. Smith), the chairman of the
Subcommittee on Trade.
Mr. SMITH of Nebraska. Mr. Speaker, I rise today in support of the
United States-Taiwan Expedited Double-Tax Relief Act.
The bill, as we have been hearing, would align the tax treatment of
income earned in the U.S. by Taiwanese
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residents and businesses with that of any other foreign national from a
country with whom the United States has a tax treaty, preventing the
double taxation of Taiwanese residents and businesses engaging in
business with Americans.
As we know, Taiwan is an important and strategic ally in the Indo-
Pacific region, and a democratic success story, I might add a lowercase
democratic success story, but we know that it is the eighth largest
trading partner to our country.
U.S. exports to Taiwan support hundreds of thousands of American
jobs, and cumulative Taiwanese investment in the U.S. totals more than
$137 billion.
Taiwan also plays a critical role in our technology supply chains as
we have been hearing and is certainly a key national security partner.
Despite this, on the list of the 66 countries the U.S. currently has
income tax treaties with, including China, Taiwan is conspicuously
absent.
Eliminating the undue double taxation of Taiwanese residents and
businesses promotes economic efficiency and integration, strengthens
our strategic partnership with Taiwan, and reinforces the long-term
economic stability American businesses and our trusted allies need to
invest for the future and combat the influence of bad actors.
In the face of regular threats to its security and economic stability
by a predatory adversary, Taiwan and its people have called on us to
live up to our commitment as a strategic partner and friend to freedom-
loving nations.
This is a good bill which delivers an overdue solution to an issue
which has strong bipartisan support. I appreciate the discussions that
we have been having here today. This strengthens ties that we have with
a trusted ally, as well.
Mr. Speaker, I strongly encourage all my colleagues to support the
bill.
Ms. CHU. Mr. Speaker, I yield myself the balance of my time.
In closing, Taiwan is the only one of our top 10 trading partners
with whom we do not have an income tax agreement, and we need to solve
this problem by taking advantage of our robust and growing economic
partnership. That is why the Ways and Means Committee favorably
reported this bill in a unanimous bipartisan vote last Congress. I
enthusiastically support this legislation, and I urge my colleagues to
vote ``yes.''
Mr. Speaker, I yield back the balance of my time.
Mr. SMITH of Missouri. Mr. Speaker, I yield myself the balance of my
time.
Mr. Speaker, to continue to rely on China for critical items like
semiconductors and chips is very dangerous. There is no reason America
can't make those same items. This bipartisan bill will remove unfair
tax barriers for American workers and businesses, strengthen our
Nation's manufacturing base, and grow jobs right here at home.
The United States is Taiwan's largest trading partner without a tax
treaty, and that means American workers are at a disadvantage. If the
relationship between the United States and Taiwan is to serve as a
defense against China, our workers must be on equal footing with one
another. I hope my colleagues will join me in supporting this critical
bill that will shift control over our economy away from China and back
toward American workers and businesses.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Nunn of Iowa). All time for debate has
expired.
Pursuant to House Resolution 5, the previous question is ordered on
the bill.
The question is on the engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
The SPEAKER pro tempore. The question is on passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. SMITH of Missouri. Mr. Speaker, on that I demand the yeas and
nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this question will be postponed.
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