I 
118TH CONGRESS 
1ST SESSION H. R. 5988 
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 HOUSE OF REPRESENTATIVES 
OCTOBER 19, 2023 
Mr. SMITH of Missouri (for himself, Mr. NEAL, Mr. SMITH of Nebraska, Mr. 
KELLY of Pennsylvania, Mr. SCHWEIKERT, Mr. LAHOOD, Mr. SMUCKER, 
Mr. MURPHY, Mr. KUSTOFF, Ms. TENNEY, Mr. MOORE of Utah, Mrs. 
STEEL, Mr. CAREY, Ms. SA´NCHEZ, Ms. DELBENE, Ms. CHU, and Mr. 
WENSTRUP) introduced the following bill 
OCTOBER 25, 2023 
Referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
special rules for the taxation of certain residents of Tai-
wan with income from sources within the United States. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘United States-Taiwan 
Expedited Double-Tax Relief Act’’. 
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SEC. 2. SPECIAL RULES FOR TAXATION OF CERTAIN RESI-
DENTS OF TAIWAN. 
(a) IN GENERAL.—Subpart D of part II of sub-
chapter N of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after section 894 the fol-
lowing 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 ap-
plied by substituting ‘the applicable per-
centage 
(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 sub-
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stituting ‘a United States permanent es-
tablishment of a qualified resident of Tai-
wan’ 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 sec-
tion 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 in-
cluded in income under section 860C 
to the extent that such amount does 
not exceed an excess inclusion with re-
spect to a REMIC. 
‘‘(ii) QUALIFIED
REIT
DIVIDEND.— 
For purposes of clause (i)(I), the term 
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‘qualified REIT dividend’ means any divi-
dend 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 in-
vestment trust of not more than 5 percent. 
‘‘(C) 
APPLICABLE
PERCENTAGE.—For 
purposes of applying subparagraph (A)(i)— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the term ‘applicable 
percentage’ means 10 percent. 
‘‘(ii) 
SPECIAL
RULES
FOR
DIVI-
DENDS.— 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
DIVI-
DEND RATE.— 
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‘‘(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 re-
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quirements of this subparagraph shall not 
be treated as met with respect to any divi-
dend paid by a regulated investment com-
pany or a real estate investment trust. 
‘‘(2) QUALIFIED WAGES.— 
‘‘(A) IN GENERAL.—No tax shall be im-
posed 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 sub-
section (c)(3)(E)), or 
‘‘(ii) is employed as a member of the 
regular component of a ship or aircraft op-
erated in international traffic. 
‘‘(B) QUALIFIED WAGES.— 
‘‘(i) IN GENERAL.—The term ‘quali-
fied wages’ means wages, salaries, or simi-
lar remunerations with respect to employ-
ment 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 
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‘‘(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 de-
rived as a student or trainee, pensions, 
amounts paid with respect to employment 
with the United States, any State (or polit-
ical subdivision thereof), or any possession 
of the United States (or any political sub-
division thereof), or other amounts speci-
fied in regulations or guidance under sub-
section (f)(1)(F). 
‘‘(3) INCOME DERIVED FROM ENTERTAINMENT 
OR ATHLETIC ACTIVITIES.— 
‘‘(A) IN GENERAL.—No tax shall be im-
posed under this chapter (and no amount shall 
be withheld under section 1441(a) or chapter 
24) with respect to income derived by an enter-
tainer or athlete who is a qualified resident of 
Taiwan from personal activities as such per-
formed in the United States if the aggregate 
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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), deter-
mined without regard to clause (ii) there-
of), or 
‘‘(ii) income which is effectively con-
nected with a United States permanent es-
tablishment. 
‘‘(b) INCOME CONNECTED WITH A UNITED STATES 
PERMANENT ESTABLISHMENT
OF
A QUALIFIED RESI-
DENT 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
IN-
COME.—In determining taxable income for pur-
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poses 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 ap-
plied— 
‘‘(A) by substituting ‘10 percent’ for ‘30 
percent ’ in subsection (a) thereof, and 
‘‘(B) by substituting ‘a United States per-
manent establishment of a qualified resident of 
Taiwan’ for ‘the conduct of a trade or business 
within the United States’ in subsection (d)(1) 
thereof. 
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‘‘(4) SPECIAL RULE WITH RESPECT TO INCOME 
DERIVED FROM CERTAIN ENTERTAINMENT OR ATH-
LETIC ACTIVITIES.— 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply to the extent that the income is de-
rived— 
‘‘(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 per-
forming such activities. 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply if the person described in sub-
paragraph (A)(ii) is contractually authorized to 
designate the individual who is to perform such 
activities. 
‘‘(5) SPECIAL RULE WITH RESPECT TO CER-
TAIN AMOUNTS.—Paragraph (1) shall not apply to 
any income which is wages, salaries, or similar re-
muneration with respect to employment or with re-
spect to any amount which is described in subsection 
(a)(2)(B)(ii). 
‘‘(c) QUALIFIED RESIDENT OF TAIWAN.—For pur-
poses of this section— 
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‘‘(1) IN GENERAL.—The term ‘qualified resi-
dent of Taiwan’ means any person who— 
‘‘(A) is liable to tax under the laws of Tai-
wan by reason of such person’s domicile, resi-
dence, place of management, place of incorpora-
tion, or any similar criterion, 
‘‘(B) is not a United States person (deter-
mined 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
COR-
PORATE ENTITIES OF TAIWAN.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (E) and (F), an entity meets the re-
quirements of this paragraph only if it— 
‘‘(i) meets the ownership and income 
requirements of subparagraph (B), 
‘‘(ii) meets the publicly traded re-
quirements of subparagraph (C), or 
‘‘(iii) meets the qualified subsidiary 
requirements of subparagraph (D). 
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‘‘(B) OWNERSHIP AND INCOME REQUIRE-
MENTS.—The requirements of this subpara-
graph 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 enti-
ty’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 Tai-
wan, 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 (deter-
mined without regard to paragraph 
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(1)(B)) with respect to residents of 
Taiwan. 
‘‘(C) 
PUBLICLY
TRADED
REQUIRE-
MENTS.—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 manage-
ment 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 Tai-
wan. 
‘‘(D) QUALIFIED
SUBSIDIARY
REQUIRE-
MENTS.—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 
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