S-199 : Still Just a Bill

The bill S. 199, titled the "United States-Taiwan Expedited Double-Tax Relief Act," aims to modify the Internal Revenue Code of 1986 to provide specific tax rules for residents of Taiwan who have income from sources within the United States. Key provisions include:

• Reduced Tax Rates: Lowers the tax rates on certain types of income, such as interest, dividends, and royalties, for qualified Taiwanese residents. The standard 30% tax rate is reduced to either 10% or 15% depending on the type of income.
• Tax Exemption for Qualified Wages: Exempts qualified wages paid to Taiwanese residents from U.S. income tax, provided certain conditions are met, such as not being a U.S. resident or being part of a ship or aircraft crew in international traffic.
• Tax Exemption for Entertainers and Athletes: Provides a tax exemption for income earned by Taiwanese entertainers and athletes performing in the U.S., if their gross receipts do not exceed $30,000 annually.
• Permanent Establishment Rules: Modifies the tax treatment for Taiwanese residents who conduct business in the U.S. through a permanent establishment, aligning it with standard U.S. corporate tax rules.
• Qualification Criteria: Sets specific criteria for who qualifies as a "qualified resident of Taiwan" for the purposes of these tax benefits, including requirements related to tax liability in Taiwan, ownership, and income thresholds.

The legislation also includes the "United States-Taiwan Tax Agreement Authorization Act," which authorizes the President to negotiate and enter into a tax agreement with Taiwan.

• Negotiation Authority: Grants the President the authority to negotiate a tax agreement with Taiwan following a determination that Taiwan provides reciprocal benefits to U.S. persons.
• Congressional Oversight: Requires the President to consult with Congress during negotiations and submit the final agreement for congressional approval through specific legislation.
• Agreement Elements: Specifies that the agreement should align with standard U.S. bilateral income tax conventions and includes provisions for entry into force upon enactment of approval and implementing legislation.
• Policy Statement: States that additional bilateral tax relief with Taiwan beyond what is provided in the bill will only occur after a tax agreement is in force and in a manner consistent with that agreement, and the US will continue to enter into tax treaties with sovereign states.