The Tax Relief for American Workers and Families Act, which included a tax relief proposal for Taiwanese businesses and workers, failed to pass the US Senate after falling short in a vote on Thursday.
The New York Times reported that Senate Republicans believed they would be in a better negotiating position after November’s election, as they hope to win control of the chamber.
A procedural vote related to the major tax package that would have increased the child tax credit and restored some tax breaks for businesses in the US had 48 votes in favor and 44 opposed, but 60 votes were needed for the measure to overcome the filibuster and pass.
Photo: Reuters
The bill, which was passed with bipartisan support in the US House of Representatives, was opposed by Republicans in the Senate, who were not in favor of expanding the child tax credit.
One part of the bill, the US-Taiwan Expedited Double-Tax Relief Act, established special rules for the taxation of residents of Taiwan with income from sources within the US.
It covered “the reduction of the rate of withholding of taxes, the application of permanent establishment rules, treatment of income from employment, and the determination of the residency of citizens of Taiwan.”
However, the bill also stipulated that because the measure required full reciprocal benefits, “it does not come into full effect until Taiwan provides the same set of benefits to US persons with income subject to tax in Taiwan.”
With the US Congress now in recess, the bill cannot be revisited until lawmakers return next month.
Taiwan has been working with the US on double taxation avoidance.
In May last year, Vice President Hsiao Bi-khim (蕭美琴), who was representative to the US at the time, said that eliminating double taxation was a priority in bilateral negotiations.
Only Taiwan among the US’ top 10 trading partners does not have a bilateral tax agreement with Washington, Hsiao said, calling it “unfair” that Taiwanese companies have to pay higher taxes than other foreign-invested companies in the US.
A Bloomberg report last year said that Taiwanese companies effectively pay a 51 percent tax rate on profits earned in the US, which is at least 10 percentage points higher than companies from South Korea or Australia.
Minister of Economic Affairs J.W. Kuo (郭智輝) discussed the elimination of double taxation during his meeting with US officials in Washington in June.
During the trip, Kuo said that the avoidance of double taxation could help attract Taiwanese small and medium-sized enterprises to invest in the US, and expressed hope that the the tax relief proposal could be passed into law as soon as possible.
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