S199119th CongressWALLET

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.

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

Roll Call Votes

No roll call votes available for this bill.

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