A bill to amend the Internal Revenue Code of 1986 to provide special rules for the taxation of certain residents of Taiwan with income from sources within the United States.
Sponsored By: Senator Mike Crapo
Introduced
Summary
special withholding and tax rules for qualified residents of Taiwan. This bill would create a statutory regime that lowers or adjusts withholding on many U.S.-source items and defines who counts as a qualified Taiwan resident. It would also authorize negotiation of a formal U.S.–Taiwan income tax Agreement and set rules for how that deal is reviewed and implemented.
Show full summary
- Taiwan residents and investors would get a special withholding framework for U.S. dividends, interest, royalties, wages, and certain gains. Most dividends would face a default 10 percent withholding and a 15 percent rate applies for some specified dividends.
- Qualification and entity tests would limit who can use the lower rates by applying 50 percent ownership and income thresholds and a 12-month lookback to ownership. The bill also caps favorable treatment for entertainment and athletic income at $30,000 per year.
- The bill would give the Executive authority to negotiate a bilateral Agreement with Taiwan while requiring Congressional notice and review. It requires a 15-day pre-notice before talks and submission of the final text and implementation plan to Congress within 270 days.
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Bill Overview
Analyzed Economic Effects
5 provisions identified: 3 benefits, 0 costs, 2 mixed.
Lower withholding for Taiwan investors
If enacted, the bill would replace the usual 30% nonresident withholding with lower fixed rates for many payments to qualified Taiwan residents. Most non-dividend items would be withheld at 10 percent. Dividends would generally be 15 percent, but a 10 percent rate would apply if the recipient directly held at least 10% of the payer for the full 12 months before the ex-dividend date. The bill also defines qualified REIT dividends (publicly traded class and 5% ownership limit) and lists payments that do not get the lower rates, such as some REIT dividends, U.S. real property sales, expatriated-entity payments, and certain REMIC items. The statute adds a cross-reference so withholding agents know to use these rules.
Lower U.S. tax for Taiwan workers
If enacted, the bill would exempt many wages paid to qualifying Taiwan residents from U.S. tax and U.S. withholding. The wage rule applies when a non-U.S. employer pays wages for U.S. services and the wages are not borne by a U.S. permanent establishment. The bill would also let some dual residents be treated as Taiwan residents for all or part of a year so they would not be treated as U.S. residents for that period. Entertainers and athletes who qualify would pay no U.S. tax on U.S. personal-activity pay if their U.S. receipts are $30,000 or less in the year.
New U.S. tax rules for Taiwan firms
If enacted, the bill would set tests for when a Taiwan corporation can get special U.S. tax treatment. One test needs at least 50% Taiwan ownership and limits payments to non‑qualified parties. There are alternate tests for publicly traded companies and small qualified-subsidiary groups. The bill narrows the U.S. permanent-establishment test for Taiwan residents, taxes income tied to a U.S. permanent establishment under normal U.S. rules, and applies section 897 and branch-profits rules using the PE standard. The branch profits tax rate for qualifying Taiwan corporations would be 10 percent instead of 30 percent.
Who counts as Taiwan resident
If enacted, the bill would define who is a "qualified resident of Taiwan" for the special rules. You would qualify if you are liable for tax under Taiwan law and are not a U.S. person under the bill's special test. If an entity is taxed as a Taiwan corporation, it must meet the statute's corporate tests to qualify.
Authority to negotiate Taiwan tax pact
If enacted, the bill would let the President negotiate and enter a tax agreement with Taiwan after a required determination. The bill would require Treasury to notify Congress 15 days before talks start, post the draft on its website 60 days before entry, provide regular briefings, and require Congress to pass implementing legislation before the deal takes effect. The final text and an implementation plan must be sent to Congress within 270 days of entry into force.
Sponsors & CoSponsors
Sponsor
Mike Crapo
ID • R
Cosponsors
James Risch
ID • R
Sponsored 1/23/2025
Ron Wyden
OR • D
Sponsored 1/23/2025
Jeanne Shaheen
NH • D
Sponsored 1/23/2025
Marsha Blackburn
TN • R
Sponsored 2/3/2025
Christopher Coons
DE • D
Sponsored 2/3/2025
Ted Cruz
TX • R
Sponsored 2/3/2025
Steve Daines
MT • R
Sponsored 2/3/2025
Chuck Grassley
IA • R
Sponsored 2/3/2025
Jeff Merkley
OR • D
Sponsored 2/3/2025
Pete Ricketts
NE • R
Sponsored 2/3/2025
Thomas Tillis
NC • R
Sponsored 2/3/2025
Chris Van Hollen
MD • D
Sponsored 2/3/2025
Mark Warner
VA • D
Sponsored 2/3/2025
Alex Padilla
CA • D
Sponsored 2/3/2025
Mark Kelly
AZ • D
Sponsored 2/3/2025
Jacky Rosen
NV • D
Sponsored 2/6/2025
Ted Budd
NC • R
Sponsored 2/6/2025
Mazie Hirono
HI • D
Sponsored 2/13/2025
James Lankford
OK • R
Sponsored 2/13/2025
Gary Peters
MI • D
Sponsored 2/13/2025
Raphael Warnock
GA • D
Sponsored 2/13/2025
Michael Bennet
CO • D
Sponsored 2/24/2025
John Curtis
UT • R
Sponsored 2/24/2025
Cindy Hyde-Smith
MS • R
Sponsored 2/25/2025
Tim Sheehy
MT • R
Sponsored 2/25/2025
Bill Cassidy
LA • R
Sponsored 3/3/2025
John Fetterman
PA • D
Sponsored 3/3/2025
Dan Sullivan
AK • R
Sponsored 3/6/2025
John Kennedy
LA • R
Sponsored 3/10/2025
Jerry Moran
KS • R
Sponsored 3/13/2025
Catherine Cortez Masto
NV • D
Sponsored 3/13/2025
Patty Murray
WA • D
Sponsored 3/25/2025
Maggie Hassan
NH • D
Sponsored 4/1/2025
Ruben Gallego
AZ • D
Sponsored 4/1/2025
John Hickenlooper
CO • D
Sponsored 5/5/2025
James Justice
WV • R
Sponsored 5/8/2025
Sen. Luján, Ben Ray [D-NM]
NM • D
Sponsored 5/19/2025
Richard Blumenthal
CT • D
Sponsored 5/22/2025
Elissa Slotkin
MI • D
Sponsored 6/12/2025
Angela Alsobrooks
MD • D
Sponsored 6/17/2025
Todd Young
IN • R
Sponsored 7/15/2025
Jim Banks
IN • R
Sponsored 7/30/2025
Lisa Blunt Rochester
DE • D
Sponsored 9/2/2025
Cynthia Lummis
WY • R
Sponsored 12/16/2025
John Hoeven
ND • R
Sponsored 1/14/2026
Tim Scott
SC • R
Sponsored 2/10/2026
Tammy Duckworth
IL • D
Sponsored 3/10/2026
Roll Call Votes
No roll call votes available for this bill.
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