[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 33 Referred in Senate (RFS)]
<DOC>
119th CONGRESS
1st Session
H. R. 33
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 16, 2025
Received; read twice and referred to the Committee on Finance
_______________________________________________________________________
AN ACT
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
TITLE I--UNITED STATES-TAIWAN EXPEDITED DOUBLE-TAX RELIEF ACT
SEC. 101. SHORT TITLE.
This title may be cited as the ``United States-Taiwan Expedited
Double-Tax Relief Act''.
SEC. 102. SPECIAL RULES FOR TAXATION OF CERTAIN RESIDENTS OF TAIWAN.
(a) In General.--Subpart D of part II of subchapter N of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 894 the following new section:
``SEC. 894A. SPECIAL RULES FOR QUALIFIED RESIDENTS OF TAIWAN.
``(a) Certain Income From United States Sources.--
``(1) Interest, dividends, and royalties, etc.--
``(A) In general.--In the case of interest (other
than original issue discount), dividends, royalties,
amounts described in section 871(a)(1)(C), and gains
described in section 871(a)(1)(D) received by or paid
to a qualified resident of Taiwan--
``(i) sections 871(a), 881(a), 1441(a),
1441(c)(5), and 1442(a) shall each be applied
by substituting `the applicable percentage (as
defined in section 894A(a)(1)(C))' for `30
percent' each place it appears, and
``(ii) sections 871(a), 881(a), and
1441(c)(1) shall each be applied by
substituting `a United States permanent
establishment of a qualified resident of
Taiwan' for `a trade or business within the
United States' each place it appears.
``(B) Exceptions.--
``(i) In general.--Subparagraph (A) shall
not apply to--
``(I) any dividend received from or
paid by a real estate investment trust
which is not a qualified REIT dividend,
``(II) any amount subject to
section 897,
``(III) any amount received from or
paid by an expatriated entity (as
defined in section 7874(a)(2)) to a
foreign related person (as defined in
section 7874(d)(3)), and
``(IV) any amount which is included
in income under section 860C to the
extent that such amount does not exceed
an excess inclusion with respect to a
REMIC.
``(ii) Qualified reit dividend.--For
purposes of clause (i)(I), the term `qualified
REIT dividend' means any dividend received from
or paid by a real estate investment trust if
such dividend is paid with respect to a class
of shares that is publicly traded and the
recipient of the dividend is a person who holds
an interest in any class of shares of the real
estate investment trust of not more than 5
percent.
``(C) Applicable percentage.--For purposes of
applying subparagraph (A)(i)--
``(i) In general.--Except as provided in
clause (ii), the term `applicable percentage'
means 10 percent.
``(ii) Special rules for dividends.-- In
the case of any dividend in respect of stock
received by or paid to a qualified resident of
Taiwan, the applicable percentage shall be 15
percent (10 percent in the case of a dividend
which meets the requirements of subparagraph
(D) and is received by or paid to an entity
taxed as a corporation in Taiwan).
``(D) Requirements for lower dividend rate.--
``(i) In general.--The requirements of this
subparagraph are met with respect to any
dividend in respect of stock in a corporation
if, at all times during the 12-month period
ending on the date such stock becomes ex-
dividend with respect to such dividend--
``(I) the dividend is derived by a
qualified resident of Taiwan, and
``(II) such qualified resident of
Taiwan has held directly at least 10
percent (by vote and value) of the
total outstanding shares of stock in
such corporation.
For purposes of subclause (II), a person shall
be treated as directly holding a share of stock
during any period described in the preceding
sentence if the share was held by a corporation
from which such person later acquired that
share and such corporation was, at the time the
share was acquired, both a connected person to
such person and a qualified resident of Taiwan.
``(ii) Exception for rics and reits.--
Notwithstanding clause (i), the requirements of
this subparagraph shall not be treated as met
with respect to any dividend paid by a
regulated investment company or a real estate
investment trust.
``(2) Qualified wages.--
``(A) In general.--No tax shall be imposed under
this chapter (and no amount shall be withheld under
section 1441(a) or chapter 24) with respect to
qualified wages paid to a qualified resident of Taiwan
who--
``(i) is not a resident of the United
States (determined without regard to subsection
(c)(3)(E)), or
``(ii) is employed as a member of the
regular component of a ship or aircraft
operated in international traffic.
``(B) Qualified wages.--
``(i) In general.--The term `qualified
wages' means wages, salaries, or similar
remunerations with respect to employment
involving the performance of personal services
within the United States which--
``(I) are paid by (or on behalf of)
any employer other than a United States
person, and
``(II) are not borne by a United
States permanent establishment of any
person other than a United States
person.
``(ii) Exceptions.--Such term shall not
include directors' fees, income derived as an
entertainer or athlete, income derived as a
student or trainee, pensions, amounts paid with
respect to employment with the United States,
any State (or political subdivision thereof),
or any possession of the United States (or any
political subdivision thereof), or other
amounts specified in regulations or guidance
under subsection (f)(1)(F).
``(3) Income derived from entertainment or athletic
activities.--
``(A) In general.--No tax shall be imposed under
this chapter (and no amount shall be withheld under
section 1441(a) or chapter 24) with respect to income
derived by an entertainer or athlete who is a qualified
resident of Taiwan from personal activities as such
performed in the United States if the aggregate amount
of gross receipts from such activities for the taxable
year do not exceed $30,000.
``(B) Exception.--Subparagraph (A) shall not apply
with respect to--
``(i) income which is qualified wages (as
defined in paragraph (2)(B), determined without
regard to clause (ii) thereof), or
``(ii) income which is effectively
connected with a United States permanent
establishment.
``(b) Income Connected With a United States Permanent Establishment
of a Qualified Resident of Taiwan.--
``(1) In general.--
``(A) In general.--In lieu of applying sections
871(b) and 882, a qualified resident of Taiwan that
carries on a trade or business within the United States
through a United States permanent establishment shall
be taxable as provided in section 1, 11, 55, or 59A, on
its taxable income which is effectively connected with
such permanent establishment.
``(B) Determination of taxable income.--In
determining taxable income for purposes of paragraph
(1), gross income includes only gross income which is
effectively connected with the permanent establishment.
``(2) Treatment of dispositions of united states real
property.--In the case of a qualified resident of Taiwan,
section 897(a) shall be applied--
``(A) by substituting `carried on a trade or
business within the United States through a United
States permanent establishment' for `were engaged in a
trade or business within the United States', and
``(B) by substituting `such United States permanent
establishment' for `such trade or business'.
``(3) Treatment of branch profits taxes.--In the case of
any corporation which is a qualified resident of Taiwan,
section 884 shall be applied--
``(A) by substituting `10 percent' for `30 percent'
in subsection (a) thereof, and
``(B) by substituting `a United States permanent
establishment of a qualified resident of Taiwan' for
`the conduct of a trade or business within the United
States' in subsection (d)(1) thereof.
``(4) Special rule with respect to income derived from
certain entertainment or athletic activities.--
``(A) In general.--Paragraph (1) shall not apply to
the extent that the income is derived--
``(i) in respect of entertainment or
athletic activities performed in the United
States, and
``(ii) by a qualified resident of Taiwan
who is not the entertainer or athlete
performing such activities.
``(B) Exception.--Subparagraph (A) shall not apply
if the person described in subparagraph (A)(ii) is
contractually authorized to designate the individual
who is to perform such activities.
``(5) Special rule with respect to certain amounts.--
Paragraph (1) shall not apply to any income which is wages,
salaries, or similar remuneration with respect to employment or
with respect to any amount which is described in subsection
(a)(2)(B)(ii).
``(c) Qualified Resident of Taiwan.--For purposes of this section--
``(1) In general.--The term `qualified resident of Taiwan'
means any person who--
``(A) is liable to tax under the laws of Taiwan by
reason of such person's domicile, residence, place of
management, place of incorporation, or any similar
criterion,
``(B) is not a United States person (determined
without regard to paragraph (3)(E)), and
``(C) in the case of an entity taxed as a
corporation in Taiwan, meets the requirements of
paragraph (2).
``(2) Limitation on benefits for corporate entities of
taiwan.--
``(A) In general.--Subject to subparagraphs (E) and
(F), an entity meets the requirements of this paragraph
only if it--
``(i) meets the ownership and income
requirements of subparagraph (B),
``(ii) meets the publicly traded
requirements of subparagraph (C), or
``(iii) meets the qualified subsidiary
requirements of subparagraph (D).
``(B) Ownership and income requirements.--The
requirements of this subparagraph are met for an entity
if--
``(i) at least 50 percent (by vote and
value) of the total outstanding shares of stock
in such entity are owned directly or indirectly
by qualified residents of Taiwan, and
``(ii) less than 50 percent of such
entity's gross income (and in the case of an
entity that is a member of a tested group, less
than 50 percent of the tested group's gross
income) is paid or accrued, directly or
indirectly, in the form of payments that are
deductible for purposes of the income taxes
imposed by Taiwan, to persons who are not--
``(I) qualified residents of
Taiwan, or
``(II) United States persons who
meet such requirements with respect to
the United States as determined by the
Secretary to be equivalent to the
requirements of this subsection
(determined without regard to paragraph
(1)(B)) with respect to residents of
Taiwan.
``(C) Publicly traded requirements.--An entity
meets the requirements of this subparagraph if--
``(i) the principal class of its shares
(and any disproportionate class of shares) of
such entity are primarily and regularly traded
on an established securities market in Taiwan,
or
``(ii) the primary place of management and
control of the entity is in Taiwan and all
classes of its outstanding shares described in
clause (i) are regularly traded on an
established securities market in Taiwan.
``(D) Qualified subsidiary requirements.--An entity
meets the requirement of this subparagraph if--
``(i) at least 50 percent (by vote and
value) of the total outstanding shares of the
stock of such entity are owned directly or
indirectly by 5 or fewer entities--
``(I) which meet the requirements
of subparagraph (C), or
``(II) which are United States
persons the principal class of the
shares (and any disproportionate class
of shares) of which are primarily and
regularly traded on an established
securities market in the United States,
and
``(ii) the entity meets the requirements of
clause (ii) of subparagraph (B).
``(E) Only indirect ownership through qualifying
intermediaries counted.--
``(i) In general.--Stock in an entity owned
by a person indirectly through 1 or more other
persons shall not be treated as owned by such
person in determining whether the person meets
the requirements of subparagraph (B)(i) or
(D)(i) unless all such other persons are
qualifying intermediate owners.
``(ii) Qualifying intermediate owners.--The
term `qualifying intermediate owner' means a
person that is--
``(I) a qualified resident of
Taiwan, or
``(II) a resident of any other
foreign country (other than a foreign
country that is a foreign country of
concern) that has in effect a
comprehensive convention with the
United States for the avoidance of
double taxation.
``(iii) Special rule for qualified
subsidiaries.--For purposes of applying
subparagraph (D)(i