United States-Taiwan Expedited Double-Tax Relief Act

Floor Speech

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 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.

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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.

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