Taiwan Aims to Reach Tax Agreement with United States in 2022
Taiwan’s Finance Minister Optimistic About Tax Deal
Taiwan is hopeful of finalizing a long-awaited tax agreement with the United States in 2022, according to Finance Minister Chuang Tsui-yun. Both countries believe that such an agreement would encourage increased investment, a goal that Taipei has long been pushing for. This positive development comes after Republican and Democratic members of the U.S. House of Representatives introduced legislation in July, granting President Joe Biden’s administration the authority to negotiate the tax agreement with Taiwan.
Benefits of the Tax Agreement
If implemented, the tax agreement, similar to a treaty, would provide several advantages. It would facilitate investment, safeguard against tax evasion, and enable businesses in both the United States and Taiwan to avoid double taxation. The resolution of issues such as double taxation of personal income and corporate profits is the primary focus of the agreement, creating an improved environment to attract more investment.
Upcoming Meeting to Discuss the Plan
Finance Minister Chuang plans to discuss the tax agreement during a meeting with U.S. Treasury Secretary Janet Yellen at the Asia Pacific Economic Cooperation (APEC) gathering next month in the United States. With the aim of finalizing the agreement before June 2022, Chuang expressed optimism that the bilateral agreement would be signed and promptly take effect thereafter.
Existing Investments Between Taiwan and the United States
Taiwanese companies have invested a cumulative $28.5 billion in the United States, while U.S. companies have invested $26.6 billion in Taiwan, highlighting the significant economic ties between the two nations. However, due to the absence of a tax agreement, Taiwanese businesses and individuals are currently taxed by both the U.S. and Taiwanese governments.
Taiwan’s Importance in the Semiconductor Industry
Taiwan is a major global supplier of semiconductor chips, which are essential components in various consumer goods and military equipment. Recognizing the strategic importance of Taiwan’s chip industry, the United States has been actively encouraging Taiwanese chip companies to establish manufacturing facilities within its borders. For instance, Taiwan Semiconductor Manufacturing Co Ltd, the world’s largest contract chipmaker, has committed to investing $40 billion in factories located in the U.S. state of Arizona.