Crapo Statement at Taiwan Tax Legislation Markup | The United States Senate Committee on Finance

Washington, D.C. – U.S. Senator Mike Crapo Delivers Remarks on the United States-Taiwan Expedited Double-Tax Relief Act

September 14, 2023

Washington, D.C. – U.S. Senator Mike Crapo (R-Idaho), Ranking Member of the U.S. Senate Finance Committee, delivered the following remarks at an open executive session to consider the United States-Taiwan Expedited Double-Tax Relief Act.

As prepared for delivery:

“Thank you, Mr. Chairman, and thanks to you and your staff for your efforts to craft solutions for the very unique circumstance we are addressing today.

“Without question, deepening ties with Taiwan and its vibrant democracy is in our nation’s best interests.

“More than 90 percent of the world’s most advanced memory chips—used in everything from digital devices to AI-enabled data centers to cutting edge defense technology—are produced in Taiwan.

“Thus, this Committee has a strong interest in ensuring Taiwan remains economically and defensibly secure.

“This summer, the Senate demonstrated support for Taiwan by unanimously passing legislation I co-led with the Chairman approving the first trade agreement signed under the U.S.-Taiwan Initiative on 21st-Century Trade.

“Today, we convene to further strengthen the economic partnership between the U.S. and Taiwan by addressing double taxation to encourage cross-border investment.

“Taiwan is our largest trading partner with whom we do not have an income tax treaty.

“Normally, Congress enters into a tax treaty with a country to alleviate the double tax burden on cross-border investment. However, Taiwan’s unique status precludes it from dealing with double tax issues through a traditional tax treaty.

“The process we are considering today should not be viewed as a new template to shortcut or end-around tax treaties.

“Absent this very unique circumstance, the proper path for considering bilateral income tax treaties should be through the Foreign Relations Committee, led by Chairman Menendez and Ranking Member Risch.

“However, Taiwan’s very unique status requires a very unique solution: it requires this Committee’s expertise to make direct changes to the tax code to deliver treaty-like benefits for American and Taiwanese workers and businesses operating across our borders.

“These direct changes to the tax code will unlock cross-border investment and provide businesses and workers much-needed certainty in four main areas, all of which are in the scope of a traditional tax treaty.

1. The bill will significantly reduce withholding taxes on dividends, interest and royalties paid on cross-border investments.
2. Applying permanent establishment rules to create a higher threshold for taxation in the source country would reduce barriers for smaller and mid-sized Taiwanese companies to conduct certain activities in the U.S., fortifying our domestic supply chains.
3. For Taiwanese workers performing services in the U.S., this bill provides they can spend up to half of a year in the U.S. before subjecting their wages to U.S. income tax, encouraging those workers to invest more time in U.S. operations.
4. The bill offers a set of tie-breaker rules to ensure workers who are residents of both U.S. and Taiwan are not double taxed on their income.

“Importantly, all of these items are subject to a reciprocity clause: these benefits are contingent on Taiwan agreeing to provide reciprocal benefits to U.S.-based companies and individuals investing and working in Taiwan.

“While foreign direct investment from Taiwan into the U.S. has surged over the last few years, Taiwan is also a key destination for U.S. exports.

“Last month, back home, I heard firsthand how Taiwan is a critical ally for Idaho businesses.

“Taiwan is the second largest export destination for Idaho products, increasing by 16 percent from 2021 to 2022. And 70 percent of those exports involve electrical equipment and machinery.

“Both in Idaho and throughout our country, our economic and strategic relationship with Taiwan is as important as ever.

“This bill will help workers and businesses of all sizes get ahead in both the U.S. and Taiwan.

“Again, thank you to the Chairman, and all of the members of this committee, for their hard work and support to strengthen our long-term partnership with Taiwan.

“I also thank and recognize the staff of the Joint Committee on Taxation (JCT) for their tireless work. The Finance Committee cannot properly function without JCT’s technical expertise.

“So, thank you to Tom Barthold, JCT’s Chief of Staff, who is with us today and to the policy staff at JCT who helped all Finance members prepare for today’s markup: Kristine Roth, Jared Hermann, Jeff Arbeit, Carol Wang and Chia Chang, and many others who worked behind the scenes. Your hard work over the past few months is greatly valued and played an indispensable role to make this markup possible.

“Once the Finance Committee reports this bill, I look forward to continue working with Senators Menendez and Risch and their colleagues on the Foreign Relations Committee on this issue. I am encouraged by recent progress we have made, and confident we will be able to find an appropriate path forward for each committee.

“Thank you, Mr. Chairman, and I yield back.”

SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth
• SDG 9: Industry, Innovation, and Infrastructure
• SDG 17: Partnerships for the Goals

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 8.9: By 2030, devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and products.
• SDG 9.1: Develop quality, reliable, sustainable, and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all.
• SDG 17.16: Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology, and financial resources.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicator for SDG 8.9: Number of jobs in sustainable tourism industries.
• Indicator for SDG 9.1: Proportion of the population with access to affordable and reliable infrastructure services.
• Indicator for SDG 17.16: Amount of financial resources mobilized to support sustainable development.

Table: SDGs, Targets, and Indicators

4. Detailed Explanations:

The article discusses the United States-Taiwan Expedited Double-Tax Relief Act, which aims to strengthen the economic partnership between the U.S. and Taiwan by addressing double taxation to encourage cross-border investment. Based on the content of the article, the following SDGs, targets, and indicators can be identified:

SDG 8: Decent Work and Economic Growth

This SDG is addressed in the article through the promotion of cross-border investment and the creation of jobs. The specific target under this SDG is Target 8.9: By 2030, devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and products. The indicator for this target is the number of jobs in sustainable tourism industries.

SDG 9: Industry, Innovation, and Infrastructure

This SDG is connected to the article’s content as it focuses on the development of infrastructure to support economic development and human well-being. The specific target under this SDG is Target 9.1: Develop quality, reliable, sustainable, and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all. The indicator for this target is the proportion of the population with access to affordable and reliable infrastructure services.

SDG 17: Partnerships for the Goals

This SDG is relevant to the article as it emphasizes the importance of partnerships for sustainable development. The specific target under this SDG is Target 17.16: Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology, and financial resources. The indicator for this target is the amount of financial resources mobilized to support sustainable development.

Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.

Source: finance.senate.gov

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