Image Credit: Focus Taiwan
The U.S. Senate failed to advance a crucial package of tax reforms on Friday (Aug. 2) that aimed to remove double taxation for some Taiwan residents and companies, while paving the way for a bilateral tax agreement between Taiwan and the U.S., according to CBS News. The Tax Relief for American Families and Workers Act, which included the United States-Taiwan Expedited Double-Tax Relief Act, received 48 votes in favor and 44 opposed but fell short of the 60 votes needed to pass.
If enacted, the legislation would have exempted some Taiwanese residents from U.S. income tax under specific conditions and lowered taxes for Taiwanese companies operating in the U.S. It also proposed to grant the U.S. president authority to negotiate a formal bilateral tax agreement with Taiwan.
Taiwanese leaders have consistently supported the legislation. In June, Economics Minister Kuo Jyh-he emphasized the act’s importance during discussions with U.S. State Department and foreign ministry officials. Vice President Hsiao Bi-khim criticized the existing tax framework as unfair in May 2023, highlighting that Taiwanese companies, particularly in the semiconductor sector, were disproportionately taxed compared to other foreign businesses.
The U.S. Semiconductor Industry Association, referencing Taiwan, urged the Senate to pass the bill, stressing the importance of addressing tax matters with one of the U.S.’s top trading partners, especially in light of significant investments following the CHIPS Act.
Despite strong backing from the Democratic Party and overwhelming support in the House of Representatives in February, the bill faced opposition from most Republican members in the Senate. The failure to pass this legislation marks a significant setback for Taiwan, which has been advocating for fairer tax treatment for its businesses and citizens in the U.S.