TAIPEI (Reuters) – Taiwan’s Finance Minister, Chuang Tsui-yun, announced on Wednesday that the country is aiming to reach a long-awaited tax agreement with the United States in the coming year. This agreement has been a longstanding desire for Taipei and both sides believe it will promote increased investment.
In July, Republican and Democratic members of the U.S. House of Representatives introduced legislation that would grant President Joe Biden’s administration the authority to negotiate this tax agreement with Taiwan.
The lawmakers emphasized that this agreement, similar to a treaty, would facilitate investment, combat tax evasion, and enable businesses in both countries to avoid double taxation.
During a parliamentary session, Minister Chuang confirmed that she plans to discuss the tax agreement at the upcoming Asia Pacific Economic Cooperation (APEC) meeting in the United States next month, where she will have the opportunity to engage with U.S. Treasury Secretary Janet Yellen.
Chuang specified that the main focus of the agreement is to resolve issues related to double taxation of personal income and corporate profits. Once signed, the agreement is expected to create a more favorable environment for attracting additional investment.
“Our goal is to have the agreement signed before June of next year. Following the signing, the necessary procedures on our side can be swiftly completed, allowing the bilateral agreement to take effect,” Chuang explained.
According to Chuang, Taiwanese companies have cumulatively invested $28.5 billion in the United States, while U.S. companies have invested $26.6 billion in Taiwan.
Given that Taiwan and the United States do not have formal diplomatic relations, the absence of a tax agreement means that Taiwanese businesses and individuals are subjected to income taxation by both the U.S. and Taiwanese governments.
Taiwan is a key global supplier of semiconductor chips that are vital for a wide array of consumer goods as well as military equipment. The U.S. government has expressed a strong interest in encouraging Taiwanese chip companies to establish manufacturing facilities in the United States.
Taiwan Semiconductor Manufacturing Co Ltd, the world’s largest contract chipmaker, has committed to investing $40 billion in factories located in the state of Arizona.
(Reporting by Roger Tung and Ben Blanchard; Editing by Lincoln Feast)
