II 

Calendar No. 230 

118TH CONGRESS 

1ST SESSION S. 3084 

[Report No. 118–107] 

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. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 19, 2023 

Mr. WYDEN from the Committee on Finance, reported the following original 

bill; which was read twice and placed on the calendar 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘United States-Taiwan 

5 Expedited Double-Tax Relief Act’’. 


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1 SEC. 2. SPECIAL RULES FOR TAXATION OF CERTAIN RESI2 DENTS OF TAIWAN. 

3 (a) IN GENERAL.—Subpart D of part II of sub4 chapter N of chapter 1 of the Internal Revenue Code of 

5 1986 is amended by inserting after section 894 the fol6 lowing new section: 

7 ‘‘SEC. 894A. SPECIAL RULES FOR QUALIFIED RESIDENTS OF 

8 TAIWAN. 

9 ‘‘(a) CERTAIN INCOME FROM UNITED STATES

10 SOURCES.— 

11 ‘‘(1) INTEREST, DIVIDENDS, AND ROYALTIES, 

12 ETC.— 

13 ‘‘(A) IN GENERAL.—In the case of interest 

14 (other than original issue discount), dividends, 

15 royalties, amounts described in section 

16 871(a)(1)(C), and gains described in section 

17 871(a)(1)(D) received by or paid to a qualified 

18 resident of Taiwan— 

19 ‘‘(i) sections 871(a), 881(a), 1441(a), 

20 1441(c)(5), and 1442(a) shall each be ap21 plied by substituting ‘the applicable per22 centage (as defined in section 

23 894A(a)(1)(C))’ for ‘30 percent’ each place 

24 it appears, and 

25 ‘‘(ii) sections 871(a), 881(a), and 

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1 stituting ‘a United States permanent es2 tablishment of a qualified resident of Tai3 wan’ for ‘a trade or business within the 

4 United States’ each place it appears. 

5 ‘‘(B) EXCEPTIONS.— 

6 ‘‘(i) IN GENERAL.—Subparagraph (A) 

7 shall not apply to— 

8 ‘‘(I) any dividend received from 

9 or paid by a real estate investment 

10 trust which is not a qualified REIT 

11 dividend, 

12 ‘‘(II) any amount subject to sec13 tion 897, 

14 ‘‘(III) any amount received from 

15 or paid by an expatriated entity (as 

16 defined in section 7874(a)(2)) to a 

17 foreign related person (as defined in 

18 section 7874(d)(3)), and 

19 ‘‘(IV) any amount which is in20 cluded in income under section 860C 

21 to the extent that such amount does 

22 not exceed an excess inclusion with re23 spect to a REMIC. 

24 ‘‘(ii) QUALIFIED REIT DIVIDEND.— 

25 For purposes of clause (i)(I), the term 


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1 ‘qualified REIT dividend’ means any divi2 dend received from or paid by a real estate 

3 investment trust if such dividend is paid 

4 with respect to a class of shares that is 

5 publicly traded and the recipient of the 

6 dividend is a person who holds an interest 

7 in any class of shares of the real estate in8 vestment trust of not more than 5 percent. 

9 ‘‘(C) APPLICABLE PERCENTAGE.—For 

10 purposes of applying subparagraph (A)(i)— 

11 ‘‘(i) IN GENERAL.—Except as pro12 vided in clause (ii), the term ‘applicable 

13 percentage’ means 10 percent. 

14 ‘‘(ii) SPECIAL RULES FOR DIVI15 DENDS.— In the case of any dividend in 

16 respect of stock received by or paid to a 

17 qualified resident of Taiwan, the applicable 

18 percentage shall be 15 percent (10 percent 

19 in the case of a dividend which meets the 

20 requirements of subparagraph (D) and is 

21 received by or paid to an entity taxed as 

22 a corporation in Taiwan). 

23 ‘‘(D) REQUIREMENTS FOR LOWER DIVI24 DEND RATE.— 


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1 ‘‘(i) IN GENERAL.—The requirements 

2 of this subparagraph are met with respect 

3 to any dividend in respect of stock in a 

4 corporation if, at all times during the 12- 

5 month period ending on the date such 

6 stock becomes ex-dividend with respect to 

7 such dividend— 

8 ‘‘(I) the dividend is derived by a 

9 qualified resident of Taiwan, and 

10 ‘‘(II) such qualified resident of 

11 Taiwan has held directly at least 10 

12 percent (by vote and value) of the 

13 total outstanding shares of stock in 

14 such corporation. 

15 For purposes of subclause (II), a person 

16 shall be treated as directly holding a share 

17 of stock during any period described in the 

18 preceding sentence if the share was held by 

19 a corporation from which such person later 

20 acquired that share and such corporation 

21 was, at the time the share was acquired, 

22 both a connected person to such person 

23 and a qualified resident of Taiwan. 

24 ‘‘(ii) EXCEPTION FOR RICS AND

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1 quirements of this subparagraph shall not 

2 be treated as met with respect to any divi3 dend paid by a regulated investment com4 pany or a real estate investment trust. 

5 ‘‘(2) QUALIFIED WAGES.— 

6 ‘‘(A) IN GENERAL.—No tax shall be im7 posed under this chapter (and no amount shall 

8 be withheld under section 1441(a) or chapter 

9 24) with respect to qualified wages paid to a 

10 qualified resident of Taiwan who— 

11 ‘‘(i) is not a resident of the United 

12 States (determined without regard to sub13 section (c)(3)(E)), or 

14 ‘‘(ii) is employed as a member of the 

15 regular component of a ship or aircraft op16 erated in international traffic. 

17 ‘‘(B) QUALIFIED WAGES.— 

18 ‘‘(i) IN GENERAL.—The term ‘quali19 fied wages’ means wages, salaries, or simi20 lar remunerations with respect to employ21 ment involving the performance of personal 

22 services within the United States which— 

23 ‘‘(I) are paid by (or on behalf of) 

24 any employer other than a United 

25 States person, and 


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1 ‘‘(II) are not borne by a United 

2 States permanent establishment of 

3 any person other than a United States 

4 person. 

5 ‘‘(ii) EXCEPTIONS.—Such term shall 

6 not include directors’ fees, income derived 

7 as an entertainer or athlete, income de8 rived as a student or trainee, pensions, 

9 amounts paid with respect to employment 

10 with the United States, any State (or polit11 ical subdivision thereof), or any possession 

12 of the United States (or any political sub13 division thereof), or other amounts speci14 fied in regulations or guidance under sub15 section (f)(1)(F). 

16 ‘‘(3) INCOME DERIVED FROM ENTERTAINMENT

17 OR ATHLETIC ACTIVITIES.— 

18 ‘‘(A) IN GENERAL.—No tax shall be im19 posed under this chapter (and no amount shall 

20 be withheld under section 1441(a) or chapter 

21 24) with respect to income derived by an enter22 tainer or athlete who is a qualified resident of 

23 Taiwan from personal activities as such per24 formed in the United States if the aggregate 


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1 amount of gross receipts from such activities 

2 for the taxable year do not exceed $30,000. 

3 ‘‘(B) EXCEPTION.—Subparagraph (A) 

4 shall not apply with respect to— 

5 ‘‘(i) income which is qualified wages 

6 (as defined in paragraph (2)(B), deter7 mined without regard to clause (ii) there8 of), or 

9 ‘‘(ii) income which is effectively con10 nected with a United States permanent es11 tablishment. 

12 ‘‘(b) INCOME CONNECTED WITH A UNITED STATES

13 PERMANENT ESTABLISHMENT OF A QUALIFIED RESI14 DENT OF TAIWAN.— 

15 ‘‘(1) IN GENERAL.— 

16 ‘‘(A) IN GENERAL.—In lieu of applying 

17 sections 871(b) and 882, a qualified resident of 

18 Taiwan that carries on a trade or business 

19 within the United States through a United 

20 States permanent establishment shall be taxable 

21 as provided in section 1, 11, 55, or 59A, on its 

22 taxable income which is effectively connected 

23 with such permanent establishment. 

24 ‘‘(B) DETERMINATION OF TAXABLE IN25 COME.—In determining taxable income for purVerDate Sep 11 2014 02:08 Oct 20, 2023 Jkt 049200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3084.RS S3084

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1 poses of paragraph (1), gross income includes 

2 only gross income which is effectively connected 

3 with the permanent establishment. 

4 ‘‘(2) TREATMENT OF DISPOSITIONS OF UNITED

5 STATES REAL PROPERTY.—In the case of a qualified 

6 resident of Taiwan, section 897(a) shall be applied— 

7 ‘‘(A) by substituting ‘carried on a trade or 

8 business within the United States through a 

9 United States permanent establishment’ for 

10 ‘were engaged in a trade or business within the 

11 United States’, and 

12 ‘‘(B) by substituting ‘such United States 

13 permanent establishment’ for ‘such trade or 

14 business’. 

15 ‘‘(3) TREATMENT OF BRANCH PROFITS

16 TAXES.—In the case of any corporation which is a 

17 qualified resident of Taiwan, section 884 shall be ap18 plied— 

19 ‘‘(A) by substituting ‘10 percent’ for ‘30 

20 percent ’ in subsection (a) thereof, and 

21 ‘‘(B) by substituting ‘a United States per22 manent establishment of a qualified resident of 

23 Taiwan’ for ‘the conduct of a trade or business 

24 within the United States’ in subsection (d)(1) 

25 thereof. 


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1 ‘‘(4) SPECIAL RULE WITH RESPECT TO INCOME

2 DERIVED FROM CERTAIN ENTERTAINMENT OR ATH3 LETIC ACTIVITIES.— 

4 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

5 not apply to the extent that the income is de6 rived— 

7 ‘‘(i) in respect of entertainment or 

8 athletic activities performed in the United 

9 States, and 

10 ‘‘(ii) by a qualified resident of Taiwan 

11 who is not the entertainer or athlete per12 forming such activities. 

13 ‘‘(B) EXCEPTION.—Subparagraph (A) 

14 shall not apply if the person described in sub15 paragraph (A)(ii) is contractually authorized to 

16 designate the individual who is to perform such 

17 activities. 

18 ‘‘(5) SPECIAL RULE WITH RESPECT TO CER19 TAIN AMOUNTS.—Paragraph (1) shall not apply to 

20 any income which is wages, salaries, or similar re21 muneration with respect to employment or with re22 spect to any amount which is described in subsection 

23 (a)(2)(B)(ii). 

24 ‘‘(c) QUALIFIED RESIDENT OF TAIWAN.—For pur25 poses of this section— 


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1 ‘‘(1) IN GENERAL.—The term ‘qualified resi2 dent of Taiwan’ means any person who— 

3 ‘‘(A) is liable to tax under the laws of Tai4 wan by reason of such person’s domicile, resi5 dence, place of management, place of incorpora6 tion, or any similar criterion, 

7 ‘‘(B) is not a United States person (deter8 mined without regard to paragraph (3)(E)), 

9 and 

10 ‘‘(C) in the case of an entity taxed as a 

11 corporation in Taiwan, meets the requirements 

12 of paragraph (2). 

13 ‘‘(2) LIMITATION ON BENEFITS FOR COR14 PORATE ENTITIES OF TAIWAN.— 

15 ‘‘(A) IN GENERAL.—Subject to subpara16 graphs (E) and (F), an entity meets the re17 quirements of this paragraph only if it— 

18 ‘‘(i) meets the ownership and income 

19 requirements of subparagraph (B), 

20 ‘‘(ii) meets the publicly traded re21 quirements of subparagraph (C), or 

22 ‘‘(iii) meets the qualified subsidiary 

23 requirements of subparagraph (D). 


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1 ‘‘(B) OWNERSHIP AND INCOME REQUIRE2 MENTS.—The requirements of this subpara3 graph are met for an entity if— 

4 ‘‘(i) at least 50 percent (by vote and 

5 value) of the total outstanding shares of 

6 stock in such entity are owned directly or 

7 indirectly by qualified residents of Taiwan, 

8 and 

9 ‘‘(ii) less than 50 percent of such enti10 ty’s gross income (and in the case of an 

11 entity that is a member of a tested group, 

12 less than 50 percent of the tested group’s 

13 gross income) is paid or accrued, directly 

14 or indirectly, in the form of payments that 

15 are deductible for purposes of the income 

16 taxes imposed by Taiwan, to persons who 

17 are not— 

18 ‘‘(I) qualified residents of Tai19 wan, or 

20 ‘‘(II) United States persons who 

21 meet such requirements with respect 

22 to the United States as determined by 

23 the Secretary to be equivalent to the 

24 requirements of this subsection (deter25 mined without regard to paragraph 


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1 (1)(B)) with respect to residents of 

2 Taiwan. 

3 ‘‘(C) PUBLICLY TRADED REQUIRE4 MENTS.—An entity meets the requirements of 

5 this subparagraph if— 

6 ‘‘(i) the principal class of its shares 

7 (and any disproportionate class of shares) 

8 of such entity are primarily and regularly 

9 traded on an established securities market 

10 in Taiwan, or 

11 ‘‘(ii) the primary place of manage12 ment and control of the entity is in Taiwan 

13 and all classes of its outstanding shares 

14 described in clause (i) are regularly traded 

15 on an established securities market in Tai16 wan. 

17 ‘‘(D) QUALIFIED SUBSIDIARY REQUIRE18 MENTS.—An entity meets the requirement of 

19 this subparagraph if— 

20 ‘‘(i) at least 50 percent (by vote and 

21 value) of the total outstanding shares of 

22 the stock of such entity are owned directly 

23 or indirectly by 5 or fewer entities— 

24 ‘‘(I) which meet the requirements 

25 of subparagraph (C), or 


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1 ‘‘(II) which are United States 

2 persons the principal class of the 

3 shares (and any disproportionate class 

4 of shares) of which are primarily and 

5 regularly traded on an established se6 curities market in the United States, 

7 and 

8 ‘‘(ii) the entity meets the require9 ments of clause (ii) of subparagraph (B). 

10 ‘‘(E) ONLY INDIRECT OWNERSHIP

11 THROUGH QUALIFYING INTERMEDIARIES

12 COUNTED.— 

13 ‘‘(i) IN GENERAL.—Stock in an entity 

14 owned by a person indirectly through 1 or 

15 more other persons shall not be treated as 

16 owned by such person in determining 

17 whether the person meets the requirements 

18 of subparagraph (B)(i) or (D)(i) unless all 

19 such other persons are qualifying inter20 mediate owners. 

21 ‘‘(ii) QUALIFYING INTERMEDIATE

22 OWNERS.—The term ‘qualifying inter23 mediate owner’ means a person that is— 

24 ‘‘(I) a qualified resident of Tai25 wan, or 


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1 ‘‘(II) a resident of any other for2 eign country (other than a foreign 

3 country that is a foreign country of 

4 concern) that has in effect a com5 prehensive convention with the United 

6 States for the avoidance of double tax7 ation. 

8 ‘‘(iii) SPECIAL RULE FOR QUALIFIED

9 SUBSIDIARIES.—For purposes of applying 

10 subparagraph (D)(i), the term ‘qualifying 

11 intermediate owner’ shall include any per12 son who is a United States person who 

13 meets such requirements with respect to 

14 the United States as determined by the 

15 Secretary to be equivalent to the require16 ments of this subsection (determined with17 out regard to paragraph (1)(B)) with re18 spect to residents of Taiwan. 

19 ‘‘(F) CERTAIN PAYMENTS NOT IN20 CLUDED.—In determining whether the require21 ments of subparagraph (B)(ii) or (D)(ii) are 

22 met with respect to an entity, the following pay23 ments shall not be taken into account: 


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1 ‘‘(i) Arm’s-length payments by the en2 tity in the ordinary course of business for 

3 services or tangible property. 

4 ‘‘(ii) In the case of a tested group, 

5 intra-group transactions. 

6 ‘‘(3) DUAL RESIDENTS.— 

7 ‘‘(A) RULES FOR DETERMINATION OF STA8 TUS.— 

9 ‘‘(i) IN GENERAL.—An individual who 

10 is an applicable dual resident and who is 

11 described in subparagraph (B), (C), or (D) 

12 shall be treated as a qualified resident of 

13 Taiwan. 

14 ‘‘(ii) APPLICABLE DUAL RESIDENT.— 

15 For purposes of this paragraph, the term 

16 ‘applicable dual resident’ means an indi17 vidual who— 

18 ‘‘(I) is not a United States cit19 izen, 

20 ‘‘(II) is a resident of the United 

21 States (determined without regard to 

22 subparagraph (E)), and 

23 ‘‘(III) would be a qualified resi24 dent of Taiwan but for paragraph 

25 (1)(B). 


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1 ‘‘(B) PERMANENT HOME.—An individual 

2 is described in this subparagraph if such indi3 vidual— 

4 ‘‘(i) has a permanent home available 

5 to such individual in Taiwan, and 

6 ‘‘(ii) does not have a permanent home 

7 available to such individual in the United 

8 States. 

9 ‘‘(C) CENTER OF VITAL INTERESTS.—An 

10 individual is described in this subparagraph if— 

11 ‘‘(i) such individual has a permanent 

12 home available to such individual in both 

13 Taiwan and the United States, and 

14 ‘‘(ii) such individual’s personal and 

15 economic relations (center of vital inter16 ests) are closer to Taiwan than to the 

17 United States. 

18 ‘‘(D) HABITUAL ABODE.—An individual is 

19 described in this subparagraph if— 

20 ‘‘(i) such individual— 

21 ‘‘(I) does not have a permanent 

22 home available to such individual in 

23 either Taiwan or the United States, or 

24 ‘‘(II) has a permanent home 

25 available to such individual in both 


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1 Taiwan and the United States but 

2 such individual’s center of vital inter3 ests under subparagraph (C)(ii) can4 not be determined, and 

5 ‘‘(ii) such individual has a habitual 

6 abode in Taiwan and not the United 

7 States. 

8 ‘‘(E) UNITED STATES TAX TREATMENT OF

9 QUALIFIED RESIDENT OF TAIWAN.—Notwith10 standing section 7701, an individual who is 

11 treated as a qualified resident of Taiwan by 

12 reason of this paragraph for all or any portion 

13 of a taxable year shall not be treated as a resi14 dent of the United States for purposes of com15 puting such individual’s United States income 

16 tax liability for such taxable year or portion 

17 thereof. 

18 ‘‘(4) RULES OF SPECIAL APPLICATION.— 

19 ‘‘(A) DIVIDENDS.—For purposes of apply20 ing this section to any dividend, paragraph 

21 (2)(D) shall be applied without regard to clause 

22 (ii) thereof. 

23 ‘‘(B) ITEMS OF INCOME EMANATING FROM

24 AN ACTIVE TRADE OR BUSINESS IN TAIWAN.— 

25 For purposes of this section— 


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1 ‘‘(i) IN GENERAL.—Notwithstanding 

2 the preceding paragraphs of this sub3 section, if an entity taxed as a corporation 

4 in Taiwan is not a qualified resident of 

5 Taiwan but meets the requirements of sub6 paragraphs (A) and (B) of paragraph (1), 

7 any qualified item of income such entity 

8 derived from the United States shall be 

9 treated as income of a qualified resident of 

10 Taiwan. 

11 ‘‘(ii) QUALIFIED ITEMS OF INCOME.— 

12 ‘‘(I) IN GENERAL.—The term 

13 ‘qualified item of income’ means any 

14 item of income which emanates from, 

15 or is incidental to, the conduct of an 

16 active trade or business in Taiwan 

17 (other than operating as a holding 

18 company, providing overall supervision 

19 or administration of a group of com20 panies, providing group financing, or 

21 making or managing investments (un22 less such making or managing invest23 ments is carried on by a bank, insur24 ance company, or registered securities 


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1 dealer in the ordinary course of its 

2 business as such)). 

3 ‘‘(II) SUBSTANTIAL ACTIVITY RE4 QUIREMENT.—An item of income 

5 which is derived from a trade or busi6 ness conducted in the United States 

7 or from a connected person shall be a 

8 qualified item of income only if the 

9 trade or business activity conducted in 

10 Taiwan to which the item is related is 

11 substantial in relation to the same or 

12 a complementary trade or business ac13 tivity carried on in the United States. 

14 For purposes of applying this sub15 clause, activities conducted by persons 

16 that are connected to the entity de17 scribed in clause (i) shall be deemed 

18 to be conducted by such entity. 

19 ‘‘(iii) EXCEPTION.—This subpara20 graph shall not apply to any item of in21 come derived by an entity if at least 50 

22 percent (by vote or value) of such entity is 

23 owned (directly or indirectly) or controlled 

24 by residents of a foreign country of con25 cern. 


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1 ‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.— 

2 For purposes of this section— 

3 ‘‘(1) UNITED STATES PERMANENT ESTABLISH4 MENT.— 

5 ‘‘(A) IN GENERAL.—The term ‘United 

6 States permanent establishment’ means, with 

7 respect to a qualified resident of Taiwan, a per8 manent establishment of such resident which is 

9 within the United States. 

10 ‘‘(B) SPECIAL RULE.—The determination 

11 of whether there is a permanent establishment 

12 of a qualified resident of Taiwan within the 

13 United States shall be made without regard to 

14 whether an entity which is taxed as a corpora15 tion in Taiwan and which is a qualified resident 

16 of Taiwan controls or is controlled by— 

17 ‘‘(i) a domestic corporation, or 

18 ‘‘(ii) any other person that carries on 

19 business in the United States (whether 

20 through a permanent establishment or oth21 erwise). 

22 ‘‘(2) PERMANENT ESTABLISHMENT.— 

23 ‘‘(A) IN GENERAL.—The term ‘permanent 

24 establishment’ means a fixed place of business 


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1 through which a trade or business is wholly or 

2 partly carried on. Such term shall include— 

3 ‘‘(i) a place of management, 

4 ‘‘(ii) a branch, 

5 ‘‘(iii) an office, 

6 ‘‘(iv) a factory, 

7 ‘‘(v) a workshop, and 

8 ‘‘(vi) a mine, an oil or gas well, a 

9 quarry, or any other place of extraction of 

10 natural resources. 

11 ‘‘(B) SPECIAL RULES FOR CERTAIN TEM12 PORARY PROJECTS.— 

13 ‘‘(i) IN GENERAL.—A building site or 

14 construction or installation project, or an 

15 installation or drilling rig or ship used for 

16 the exploration or exploitation of the sea 

17 bed and its subsoil and their natural re18 sources, constitutes a permanent establish19 ment only if it lasts, or the activities of the 

20 rig or ship lasts, for more than 12 months. 

21 ‘‘(ii) DETERMINATION OF 12-MONTH

22 PERIOD.—For purposes of clause (i), the 

23 period over which a building site or con24 struction or installation project of a person 

25 lasts shall include any period of more than 


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1 30 days during which such person does not 

2 carry on activities at such building site or 

3 construction or installation project but 

4 connected activities are carried on at such 

5 building site or construction or installation 

6 project by one or more connected persons. 

7 ‘‘(C) HABITUAL EXERCISE OF CONTRACT

8 AUTHORITY TREATED AS PERMANENT ESTAB9 LISHMENT.—Notwithstanding subparagraphs 

10 (A) and (B), where a person (other than an 

11 agent of an independent status to whom sub12 paragraph (D)(ii) applies) is acting on behalf of 

13 a trade or business of a qualified resident of 

14 Taiwan and has and habitually exercises an au15 thority to conclude contracts that are binding 

16 on the trade or business, that trade or business 

17 shall be deemed to have a permanent establish18 ment in the country in which such authority is 

19 exercised in respect of any activities that the 

20 person undertakes for the trade or business, un21 less the activities of such person are limited to 

22 those described in subparagraph (D)(i) that, if 

23 exercised through a fixed place of business, 

24 would not make this fixed place of business a 


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1 permanent establishment under the provisions 

2 of that subparagraph. 

3 ‘‘(D) EXCLUSIONS.— 

4 ‘‘(i) IN GENERAL.—Notwithstanding 

5 subparagraphs (A) and (B), the term ‘per6 manent establishment’ shall not include— 

7 ‘‘(I) the use of facilities solely for 

8 the purpose of storage, display, or de9 livery of goods or merchandise belong10 ing to the trade or business, 

11 ‘‘(II) the maintenance of a stock 

12 of goods or merchandise belonging to 

13 the trade or business solely for the 

14 purpose of storage, display, or deliv15 ery, 

16 ‘‘(III) the maintenance of a stock 

17 of goods or merchandise belonging to 

18 the trade or business solely for the 

19 purpose of processing by another 

20 trade or business, 

21 ‘‘(IV) the maintenance of a fixed 

22 place of business solely for the pur23 pose of purchasing goods or merchan24 dise, or of collecting information, for 

25 the trade or business, 


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1 ‘‘(V) the maintenance of a fixed 

2 place of business solely for the pur3 pose of carrying on, for the trade or 

4 business, any other activity of a pre5 paratory or auxiliary character, or 

6 ‘‘(VI) the maintenance of a fixed 

7 place of business solely for any com8 bination of the activities mentioned in 

9 subclauses (I) through (V), provided 

10 that the overall activity of the fixed 

11 place of business resulting from this 

12 combination is of a preparatory or 

13 auxiliary character. 

14 ‘‘(ii) BROKERS AND OTHER INDE15 PENDENT AGENTS.—A trade or business 

16 shall not be considered to have a perma17 nent establishment in a country merely be18 cause it carries on business in such coun19 try through a broker, general commission 

20 agent, or any other agent of an inde21 pendent status, provided that such persons 

22 are acting in the ordinary course of their 

23 business as independent agents. 

24 ‘‘(3) TESTED GROUP.—The term ‘tested group’ 

25 includes, with respect to any entity taxed as a corVerDate Sep 11 2014 02:08 Oct 20, 2023 Jkt 049200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\S3084.RS S3084

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1 poration in Taiwan, such entity and any other entity 

2 taxed as a corporation in Taiwan that— 

3 ‘‘(A) participates as a member with such 

4 entity in a tax consolidation, fiscal unity, or 

5 similar regime that requires members of the 

6 group to share profits or losses, or 

7 ‘‘(B) shares losses with such entity pursu8 ant to a group relief or other loss sharing re9 gime. 

10 ‘‘(4) CONNECTED PERSON.—Two persons shall 

11 be ‘connected persons’ if one owns, directly or indi12 rectly, at least 50 percent of the interests in the 

13 other (or, in the case of a corporation, at least 50 

14 percent of the aggregate vote and value of the cor15 poration’s shares) or another person owns, directly 

16 or indirectly, at least 50 percent of the interests (or, 

17 in the case of a corporation, at least 50 percent of 

18 the aggregate vote and value of the corporation’s 

19 shares) in each person. In any case, a person shall 

20 be connected to another if, based on all the relevant 

21 facts and circumstances, one has control of the other 

22 or both are under the control of the same person or 

23 persons. 

24 ‘‘(5) FOREIGN COUNTRY OF CONCERN.—The 

25 term ‘foreign country of concern’ has the meaning 


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1 given such term under paragraph (7) of section 

2 9901 of the William M. (Mac) Thornberry National 

3 Defense Authorization Act for Fiscal Year 2021 (15 

4 U.S.C. 4651(7)), as added by section 103(a)(4) of 

5 the CHIPS Act of 2022). 

6 ‘‘(6) PARTNERSHIPS; BENEFICIARIES OF ES7 TATES AND TRUSTS.—For purposes of this section— 

8 ‘‘(A) a qualified resident of Taiwan which 

9 is a partner of a partnership which carries on 

10 a trade or business within the United States 

11 through a United States permanent establish12 ment shall be treated as carrying on such trade 

13 or business through such permanent establish14 ment, and 

15 ‘‘(B) a qualified resident of Taiwan which 

16 is a beneficiary of an estate or trust which car17 ries on a trade or business within the United 

18 States through a United States permanent es19 tablishment shall be treated as carrying on such 

20 trade or business through such permanent es21 tablishment. 

22 ‘‘(7) DENIAL OF BENEFITS FOR CERTAIN PAY23 MENTS THROUGH HYBRID ENTITIES.—For purposes 

24 of this section, rules similar to the rules of section 

25 894(c) shall apply. 


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1 ‘‘(e) APPLICATION.— 

2 ‘‘(1) IN GENERAL.—This section shall not apply 

3 to any period unless the Secretary has determined 

4 that Taiwan has provided benefits to United States 

5 persons for such period that are reciprocal to the 

6 benefits provided to qualified residents of Taiwan 

7 under this section. 

8 ‘‘(2) PROVISION OF RECIPROCITY.—The Presi9 dent or his designee is authorized to exchange let10 ters, enter into an agreement, or take other nec11 essary and appropriate steps relative to Taiwan for 

12 the reciprocal provision of the benefits described in 

13 this section. 

14 ‘‘(f) REGULATIONS OR OTHER GUIDANCE.— 

15 ‘‘(1) IN GENERAL.—The Secretary shall issue 

16 such regulations or other guidance as may be nec17 essary or appropriate to carry out the provisions of 

18 this section, including such regulations or guidance 

19 for— 

20 ‘‘(A) determining— 

21 ‘‘(i) what constitutes a United States 

22 permanent establishment of a qualified 

23 resident of Taiwan, and 


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1 ‘‘(ii) income that is effectively con2 nected with such a permanent establish3 ment, 

4 ‘‘(B) preventing the abuse of the provisions 

5 of this section by persons who are not (or who 

6 should not be treated as) qualified residents of 

7 Taiwan, 

8 ‘‘(C) requirements for record keeping and 

9 reporting, 

10 ‘‘(D) rules to assist withholding agents or 

11 employers in determining whether a foreign per12 son is a qualified resident of Taiwan for pur13 poses of determining whether withholding or re14 porting is required for a payment (and, if with15 holding is required, whether it should be applied 

16 at a reduced rate), 

17 ‘‘(E) the application of subsection 

18 (a)(1)(D)(i) to stock held by predecessor own19 ers, 

20 ‘‘(F) determining what amounts are to be 

21 treated as qualified wages for purposes of sub22 section (a)(2), 

23 ‘‘(G) determining the amounts to which 

24 subsection (a)(3) applies, 


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1 ‘‘(H) defining established securities market 

2 for purposes of subsection (c), 

3 ‘‘(I) the application of the rules of sub4 section (c)(4)(B), 

5 ‘‘(J) the application of subsection (d)(6) 

6 and section 1446, 

7 ‘‘(K) determining ownership interests held 

8 by residents of a foreign country of concern, 

9 and 

10 ‘‘(L) determining the starting and ending 

11 dates for periods with respect to the application 

12 of this section under subsection (e), which may 

13 be separate dates for taxes withheld at the 

14 source and other taxes. 

15 ‘‘(2) REGULATIONS TO BE CONSISTENT WITH

16 MODEL TREATY.—Any regulations or other guidance 

17 issued under this section shall, to the extent prac18 tical, be consistent with the provisions of the United 

19 States model income tax convention dated February 

20 7, 2016.’’. 

21 (b) CONFORMING AMENDMENT TO WITHHOLDING

22 TAX.—Subchapter A of chapter 3 of the Internal Revenue 

23 Code of 1986 is amended by adding at the end the fol24 lowing new section: 


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1 ‘‘SEC. 1447. WITHHOLDING FOR QUALIFIED RESIDENTS OF 

2 TAIWAN. 

3 ‘‘For reduced rates of withholding for certain resi4 dents of Taiwan, see section 894A.’’. 

5 (c) CLERICAL AMENDMENTS.— 

6 (1) The table of sections for subpart D of part 

7 II of subchapter N of chapter 1 of the Internal Rev8 enue Code of 1986 is amended by inserting after the 

9 item relating to section 894 the following new item: 

‘‘Sec. 894A. Special rules for qualified residents of Taiwan.’’. 

10 (2) The table of sections for subchapter A of 

11 chapter 3 of such Code is amended by adding at the 

12 end the following new item: 

‘‘Sec. 1447. Withholding for qualified residents of Taiwan.’’. 


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Calendar No. 230 

118TH CONGRESS 

1ST SESSION S. 3084 

[Report No. 118–107] 

A BILL 

To amend the Internal Revenue Code of 1986 to 

within the United States. residents of Taiwan with income from sources provide special rules for the taxation of certain 

OCTOBER 19, 2023 

Read twice and placed on the calendar 


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