On January 15, 2025, the U.S. House of Representatives passed the United States-Taiwan Expedited Double-Tax Relief Act by a vote of 423-1.1 This bill was first introduced in 2023 during the 118th Congressional session but was not passed into law during that session.2 However, on January 3, 2025, Representative Jason Smith (R-MO), the House’s Ways and Means Committee Chair, reintroduced the bill, which would provide special rules applicable to residents of Taiwan with income from U.S. sources, if enacted into law.3
WHY THIS MATTERS
The bipartisan bill aims to relieve the double taxation burdens of American and Taiwanese tax residents and includes provisions to address permanent establishment and residency issues, among others. While this bill does not provide comprehensive benefits as conferred under a bilateral income tax treaty, it aims to foster cross-border commerce and mitigate double taxation imposed on multinational businesses, investors, and workers.
More Details
As reported in GMS Flash Alert 2023-183, the bill includes provisions that address the treatment of certain income from U.S. sources.4 This includes the reduction of withholding taxes, the application of permanent establishment rules, treatment of income from employment, and the determination of qualified resident of Taiwan.5 Additionally, to facilitate reciprocity, the bill authorizes the president of the United States to negotiate and enter into a tax agreement (the “Agreement”) with Taiwan that conforms with provisions in the 2016 United States Model Income Tax Convention.6
KPMG INSIGHTS
If the bill is enacted into law, it will enter into force when the Secretary of the Treasury confirms that the relevant authority in Taiwan has taken steps to implement the Agreement.7
While the bill has bipartisan support in the Senate, the timing of the Senate’s consideration of the bill is uncertain.
Companies with cross-border workers between the United States and Taiwan with questions or concerns about how the provisions of the bill might affect them and their workers and what they can do now to prepare – in the event the bill becomes law – should consult with their usual qualified tax professional.
Footnotes:
1 See “Legislative update: House passes Taiwan double-tax relief bill” in TaxNewsFlash (Jan. 15, 2025), a publication of KPMG LLP (U.S.) at: https://kpmg.com/us/en/taxnewsflash/news/2025/01/tnf-legislative-update-house-passes-taiwan-double-tax-relief-bill.html.
2 See “U.S.-Taiwan Double-Tax Mitigation Bill Supported by Senate Finance Committee” in GMS Flash Alert 2023-183 (September 21, 2023), https://kpmg.com/xx/en/our-insights/gms-flash-alert/flash-alert-2023-183.html.
3 See United States-Taiwan Expedited Double-Tax Relief Act, H.R. 33, 119th Cong. (Jan. 15, 2025) on the www.Congress.gov website at: https://www.congress.gov/bill/119th-congress/house-bill/33/text?s=5&r=2&q=%7B%22search%22%3A%22H.R.+33%2C+119th%22%7D.
4 See “U.S.-Taiwan Double-Tax Mitigation Bill Supported by Senate Finance Committee” in GMS Flash Alert 2023-183 (September 21, 2023), https://kpmg.com/xx/en/our-insights/gms-flash-alert/flash-alert-2023-183.html. For a related report, see “U.S-Taiwan Double-Tax Mitigation Bill Moves Forward” in GMS Flash Alert 2023-230 (December 1, 2023), https://kpmg.com/xx/en/our-insights/gms-flash-alert/flash-alert-2023-230.html.
5 See United States-Taiwan Expedited Double-Tax Relief Act, H.R. 33, 119th Cong. (Jan. 15, 2025) on the www.Congress.gov website at: https://www.congress.gov/bill/119th-congress/house-bill/33/text?s=5&r=2&q=%7B%22search%22%3A%22H.R.+33%2C+119th%22%7D.
6 Ibid.
7 Ibid.
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Disclaimer
The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
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