- ‘A tax treaty represents the logical next move’ ~ Chairman Jason Smith, United States House Committee on Ways and Means.
- The Taiwan Institute of Economic Research (TIER,) forecast Taiwan’s GDP 3.42 percent in 2025.
By Caribbean News Global 
TORONTO, Canada – The Cross-Strait Agreement on Trade in Services and the Cross-Strait Agreement on Avoidance of Double Taxation and Enhancement of Tax Cooperation were signed in 2013 and 2015, respectively, but have not taken effect, referenced the 2024 investment climate statements, Taiwan. The US Department of the Treasury announced in October 2024 that the United States and Taiwan, under the auspices of the American Institute in Taiwan (AIT) and the Taipei Economic and Cultural Representative Office in the United States (TECRO), begin negotiations on a comprehensive agreement to address double taxation issues.
US Senate Finance Committee legislation to provide expedited double-tax relief on US-Taiwan cross-border investment and to authorize the president to negotiate a tax agreement with Taiwan to provide broader bilateral tax relief (H.R. 33), passed the US House of Representatives by a vote of 423-1 on January 15, 2025.
In 2022, the US and Taiwan launched the US-Taiwan Initiative on 21st-Century Trade [21CT] to develop a roadmap for negotiations for reaching agreements in several specified trade areas.
Taiwan has eight free trade agreements [FTA] economic cooperation agreements with Belize, Eswatini, Guatemala, Marshall Islands, New Zealand, Panama, Paraguay, and Singapore, after terminating FTA with El Salvador and Honduras in May 2023.
Taiwan has 35 bilateral income tax agreements in force, available here, however, Taiwan companies previously cited the absence of a bilateral taxation treaty as a key barrier to increased investment in the United States.
The Bill as presented
Chairman Jason Smith United States House Committee on Ways and Means, said:
“The 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 here at home. US exports to Taiwan support 188,000 American jobs and Taiwanese investment in the United States supports another 21,000. Reducing burdens to 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, the European Union, Japan, Australia, and New Zealand all enjoy better tax treatment than Americans in Taiwan currently do. That’s 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 US 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.”
Chairman Smith stated: “ A tax treaty represents the logical next move. Advancing this legislation to President Donald Trump desk is the right thing to do for American workers and our economy as a whole,” adding “ this bill [to] help critical American manufacturing sectors and protect our national and economic security.”
Policy matters
- President Trump’s – America First Trade Policy is available here.
- The Organization for Economic Co-operation and Development (OECD) Global Tax Deal (Global Tax Deal) is available here.
- The text of the US-Taiwan tax legislation (S. 199) is available here.
Strengthening economic partnership
“Taiwan’s unique status requires a unique tax solution,” US Senate Committee on Finance, chairman Mike Crapo (R-Idaho) and Ranking Member Ron Wyden (D-Oregon), said. “This legislation strengthens the economic partnership between the US and Taiwan by delivering treaty-like tax benefits for American and Taiwanese workers and businesses operating across our borders. The Finance Committee has expressed unanimous support for this effort in the past, and [today’s] introduction in the Senate demonstrates a bipartisan commitment to bolster our relationship with a key economic and strategic partner. We will continue our efforts to get this important measure enacted into law as soon as possible.”
“Taiwan is a close friend and partner of the United States as we look to support regional stability and secure supply chains that are critical for the American economy,” US Senate Foreign Relations Committee, chairman Jim Risch (R-Idaho) and Ranking Member Jeanne Shaheen (D-New Hampshire), said. “This legislation will reduce unnecessary double taxation on our companies, spur American economic prosperity and innovation in technologies of the future and deepen our economic relationship with Taiwan. We are grateful to our colleagues for supporting this commonsense legislation.”
Formosan Association for Public Affairs (FAPA), President Dr Su-Mei Kao, commented:
“This legislation will also strengthen national security against China’s economic influence and coercion. We strongly urge the Senate to act swiftly in passing this critical bill and ensure it reaches the president’s desk for prompt enactment.”
What matters?
KPMG, known for advising key organizations across sectors like public service, finance, and healthcare on issues such as climate change, technology, and economic growth, noted:
“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.”
KPMG Insights added: “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. 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.”
US-Taiwan trade and economic relations
The Congressional Research Services, updated January 14, 2025, reads in part:
“Taiwan is a top US trade partner and a key link in global technology and manufacturing supply chains, supporting the United States, the People’s Republic of China (PRC or China), and other global markets. Taiwan’s economy is highly dependent on global trade; exports account for about 70 percent of gross domestic product (GDP). Taiwan’s policies are seeking to generate growth in emerging technologies and reduce its dependence on the PRC by diversifying trade and investment and on-shoring production. Central to these efforts are US and Taiwan government actions to deepen commercial ties. Issues facing Congress include identifying and asserting its prerogatives over the US-Taiwan 21st Century Trade Initiative negotiations and considering legislation that would prevent double taxation and boost two-way investment.
“US-Taiwan Commercial Ties Taiwan is the United States’ 7th-largest merchandise trading partner ($128 billion in total goods trade), 10th-largest export market ($40 billion), and 8th-largest source of imports ($88 billion), according to 2023 US data.
“US agricultural exports to Taiwan in 2023 were $4.4 billion. US service exports to Taiwan in 2023 were $11.9 billion. Taiwan’s goods exports to the United States grew by 100 percent between 2018 and 2022, and fell by 4.5 percent in 2023 over 2022, with a drop in certain electronics, steel, and other items.”
Taiwan’s global reach
The United States and Taiwan continue efforts to address market barriers and bolster economic ties supported by the American Institute in Taiwan (AIT) the Taipei Economic and Cultural Representative Office in the United States (TECRO), SELECT FLORIDA, TECO Miami, representatives of the US Department of State and the Taiwan Ministry of Foreign Affairs, (MOFA) on expanding Taiwan’s international forums.
Taiwan is implementing the Four Pillars of Peace action plan, which involves strengthening self-defense, enhancing economic security, deepening democratic ties, and engaging in dialogue. Taiwan actively contributes to global supply chains, especially in the semiconductor and other high-tech industries. Taiwan is actively committed to ensuring peace, stability, and prosperity in the Taiwan Strait and the Indo-Pacific region. Read more here.
US representatives repeatedly underscore Taiwan’s exceptional expertise and valuable contributions in critical areas, particularly in health, aviation safety and security, environmental protection, trade, logistics, semiconductors, technological innovation, and law enforcement cooperation.
This reiterates the US commitment to Taiwan’s cost-benefit factors and sound economic policymaking that has the potential to profoundly reshape the US-Taiwan economic landscape.
US support for Taiwan’s meaningful participation in international membership in organizations is guided by the Taiwan Relations Act, the three Joint Communiques, and the Six Assurances.
Taiwan’s GDP forecast 3.42 percent in 2025
Taiwan’s momentum is beneficial globally. The Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) last Friday announced an upward revision for Taiwan’s GDP in 2025 to 3.42 percent, up 0.27 percentage points from the 3.15 percent forecast in November 2024, due to stronger-than-expected investment and export performance.
“For 2025, Taiwan’s economic growth is projected to rely on investment and consumer spending, with external demand once again driving growth.”
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