IB 
Union Calendar No. 249 
118TH CONGRESS 
1ST SESSION H. R. 5988 
[Report No. 118–309] 
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 
DECEMBER 12, 2023 
Additional sponsors: Mr. GOMEZ, Ms. PLASKETT, Mr. KILDEE, Ms. 
MALLIOTAKIS, 
Ms. 
VAN
DUYNE, 
Mr. 
FITZPATRICK, 
Mr. 
KRISHNAMOORTHI, Mr. MOULTON, Ms. SHERRILL, Mrs. FISCHBACH, Mr. 
PANETTA, Mr. HERN, Mr. FINSTAD, Mr. ELLZEY, Mr. GOTTHEIMER, 
Mrs. CAMMACK, and Mr. OWENS 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6652
E:\BILLS\H5988.RH
H5988
DECEMBER 12, 2023 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on October 19, 2023] 
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. 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6652
E:\BILLS\H5988.RH
H5988
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
TITLE 
I—UNITED 
STATES-TAI-
WAN 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 RESI-
DENTS 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 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
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-
stituting ‘a United States permanent estab-
lishment 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 sec-
tion 897, 
‘‘(III) any amount received from 
or paid by an expatriated entity (as 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
defined in section 7874(a)(2)) to a for-
eign related person (as defined in sec-
tion 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 respect 
to a REMIC. 
‘‘(ii) QUALIFIED REIT DIVIDEND.—For 
purposes of clause (i)(I), the term ‘qualified 
REIT dividend’ means any dividend re-
ceived from or paid by a real estate invest-
ment trust if such dividend is paid with re-
spect 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 pur-
poses of applying subparagraph (A)(i)— 
‘‘(i) IN GENERAL.—Except as provided 
in clause (ii), the term ‘applicable percent-
age’ means 10 percent. 
‘‘(ii) 
SPECIAL
RULES
FOR
DIVI-
DENDS.— In the case of any dividend in re-
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
spect of stock received by or paid to a quali-
fied resident of Taiwan, the applicable per-
centage shall be 15 percent (10 percent in 
the case of a dividend which meets the re-
quirements of subparagraph (D) and is re-
ceived 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 cor-
poration 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 cor-
poration. 
For purposes of subclause (II), a person 
shall be treated as directly holding a share 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
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-
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 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 quali-
fied 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. 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
‘‘(B) QUALIFIED WAGES.— 
‘‘(i) IN GENERAL.—The term ‘qualified 
wages’ means wages, salaries, or similar re-
munerations with respect to employment in-
volving 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 per-
son. 
‘‘(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 sub-
division thereof), or any possession of the 
United States (or any political subdivision 
thereof), or other amounts specified in regu-
lations 
or 
guidance 
under 
subsection 
(f)(1)(F). 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
‘‘(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), deter-
mined without regard to clause (ii) thereof), 
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 RESIDENT 
OF TAIWAN.— 
‘‘(1) IN GENERAL.— 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
‘‘(A) IN GENERAL.—In lieu of applying sec-
tions 871(b) and 882, a qualified resident of 
Taiwan that carries on a trade or business with-
in the United States through a United States 
permanent establishment shall be taxable as pro-
vided 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-
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 busi-
ness’. 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
‘‘(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 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. 
‘‘(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 ath-
letic 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 subpara-
graph (A)(ii) is contractually authorized to des-
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
ignate the individual who is to perform such ac-
tivities. 
‘‘(5) SPECIAL RULE WITH RESPECT TO CERTAIN 
AMOUNTS.—Paragraph (1) shall not apply to any in-
come which is wages, salaries, or similar remunera-
tion 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 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 cor-
poration in Taiwan, meets the requirements of 
paragraph (2). 
‘‘(2) LIMITATION ON BENEFITS FOR CORPORATE 
ENTITIES OF TAIWAN.— 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
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 re-
quirements of this subsection (deter-
mined without regard to paragraph 
(1)(B)) with respect to residents of 
Taiwan. 
‘‘(C) PUBLICLY TRADED REQUIREMENTS.— 
An entity meets the requirements of this sub-
paragraph 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 de-
scribed in clause (i) are regularly traded on 
an established securities market in Taiwan. 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
‘‘(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 
‘‘(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 se-
curities 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 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
of subparagraph (B)(i) or (D)(i) unless all 
such other persons are qualifying inter-
mediate owners. 
‘‘(ii) QUALIFYING INTERMEDIATE OWN-
ERS.—The term ‘qualifying intermediate 
owner’ means a person that is— 
‘‘(I) a qualified resident of Tai-
wan, or 
‘‘(II) a resident of any other for-
eign country (other than a foreign 
country that is a foreign country of 
concern) that has in effect a com-
prehensive convention with the United 
States for the avoidance of double tax-
ation. 
‘‘(iii) SPECIAL RULE FOR QUALIFIED 
SUBSIDIARIES.—For purposes of applying 
subparagraph (D)(i), the term ‘qualifying 
intermediate owner’ shall include any per-
son who is a United States person who 
meets such requirements with respect to the 
United States as determined by the Sec-
retary to be equivalent to the requirements 
of this subsection (determined without re-
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
gard to paragraph (1)(B)) with respect to 
residents of Taiwan. 
‘‘(F) CERTAIN PAYMENTS NOT INCLUDED.— 
In determining whether the requirements of sub-
paragraph (B)(ii) or (D)(ii) are met with re-
spect to an entity, the following payments shall 
not be taken into account: 
‘‘(i) Arm’s-length payments by the en-
tity in the ordinary course of business for 
services or tangible property. 
‘‘(ii) In the case of a tested group, 
intra-group transactions. 
‘‘(3) DUAL RESIDENTS.— 
‘‘(A) RULES FOR DETERMINATION OF STA-
TUS.— 
‘‘(i) IN GENERAL.—An individual who 
is an applicable dual resident and who is 
described in subparagraph (B), (C), or (D) 
shall be treated as a qualified resident of 
Taiwan. 
‘‘(ii) APPLICABLE DUAL RESIDENT.— 
For purposes of this paragraph, the term 
‘applicable dual resident’ means an indi-
vidual who— 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
‘‘(I) is not a United States cit-
izen, 
‘‘(II) is a resident of the United 
States (determined without regard to 
subparagraph (E)), and 
‘‘(III) would be a qualified resi-
dent of Taiwan but for paragraph 
(1)(B). 
‘‘(B) PERMANENT HOME.—An individual is 
described in this subparagraph if such indi-
vidual— 
‘‘(i) has a permanent home available to 
such individual in Taiwan, and 
‘‘(ii) does not have a permanent home 
available to such individual in the United 
States. 
‘‘(C) CENTER
OF
VITAL
INTERESTS.—An 
individual is described in this subparagraph if— 
‘‘(i) such individual has a permanent 
home available to such individual in both 
Taiwan and the United States, and 
‘‘(ii) such individual’s personal and 
economic relations (center of vital interests) 
are closer to Taiwan than to the United 
States. 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
‘‘(D) HABITUAL ABODE.—An individual is 
described in this subparagraph if— 
‘‘(i) such individual— 
‘‘(I) does not have a permanent 
home available to such individual in 
either Taiwan or the United States, or 
‘‘(II) has a permanent home 
available to such individual in both 
Taiwan and the United States but 
such individual’s center of vital inter-
ests under subparagraph (C)(ii) cannot 
be determined, and 
‘‘(ii) such individual has a habitual 
abode in Taiwan and not the United States. 
‘‘(E) UNITED STATES TAX TREATMENT OF 
QUALIFIED
RESIDENT
OF
TAIWAN.—Notwith-
standing section 7701, an individual who is 
treated as a qualified resident of Taiwan by rea-
son of this paragraph for all or any portion of 
a taxable year shall not be treated as a resident 
of the United States for purposes of computing 
such individual’s United States income tax li-
ability for such taxable year or portion thereof. 
‘‘(4) RULES OF SPECIAL APPLICATION.— 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
‘‘(A) DIVIDENDS.—For purposes of apply-
ing this section to any dividend, paragraph 
(2)(D) shall be applied without regard to clause 
(ii) thereof. 
‘‘(B) ITEMS OF INCOME EMANATING FROM 
AN ACTIVE TRADE OR BUSINESS IN TAIWAN.— 
For purposes of this section— 
‘‘(i) IN
GENERAL.—Notwithstanding 
the preceding paragraphs of this subsection, 
if an entity taxed as a corporation in Tai-
wan is not a qualified resident of Taiwan 
but meets the requirements of subpara-
graphs (A) and (B) of paragraph (1), any 
qualified item of income such entity derived 
from the United States shall be treated as 
income of a qualified resident of Taiwan. 
‘‘(ii) QUALIFIED ITEMS OF INCOME.— 
‘‘(I) 
IN
GENERAL.—The 
term 
‘qualified item of income’ means any 
item of income which emanates from, 
or is incidental to, the conduct of an 
active trade or business in Taiwan 
(other than operating as a holding 
company, providing overall super-
vision or administration of a group of 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
companies, providing group financing, 
or making or managing investments 
(unless such making or managing in-
vestments is carried on by a bank, in-
surance company, or registered securi-
ties dealer in the ordinary course of its 
business as such)). 
‘‘(II) SUBSTANTIAL ACTIVITY RE-
QUIREMENT.—An 
item 
of 
income 
which is derived from a trade or busi-
ness conducted in the United States or 
from a connected person shall be a 
qualified item of income only if the 
trade or business activity conducted in 
Taiwan to which the item is related is 
substantial in relation to the same or 
a complementary trade or business ac-
tivity carried on in the United States. 
For purposes of applying this sub-
clause, activities conducted by persons 
that are connected to the entity de-
scribed in clause (i) shall be deemed to 
be conducted by such entity. 
‘‘(iii) EXCEPTION.—This subparagraph 
shall not apply to any item of income de-
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
rived by an entity if at least 50 percent (by 
vote or value) of such entity is owned (di-
rectly or indirectly) or controlled by resi-
dents of a foreign country of concern. 
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—For 
purposes of this section— 
‘‘(1) UNITED
STATES
PERMANENT
ESTABLISH-
MENT.— 
‘‘(A) IN
GENERAL.—The term ‘United 
States permanent establishment’ means, with re-
spect to a qualified resident of Taiwan, a perma-
nent establishment of such resident which is 
within the United States. 
‘‘(B) SPECIAL RULE.—The determination of 
whether there is a permanent establishment of a 
qualified resident of Taiwan within the United 
States shall be made without regard to whether 
an entity which is taxed as a corporation in 
Taiwan and which is a qualified resident of Tai-
wan controls or is controlled by— 
‘‘(i) a domestic corporation, or 
‘‘(ii) any other person that carries on 
business in the United States (whether 
through a permanent establishment or oth-
erwise). 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
‘‘(2) PERMANENT ESTABLISHMENT.— 
‘‘(A) IN GENERAL.—The term ‘permanent 
establishment’ means a fixed place of business 
through which a trade or business is wholly or 
partly carried on. Such term shall include— 
‘‘(i) a place of management, 
‘‘(ii) a branch, 
‘‘(iii) an office, 
‘‘(iv) a factory, 
‘‘(v) a workshop, and 
‘‘(vi) a mine, an oil or gas well, a 
quarry, or any other place of extraction of 
natural resources. 
‘‘(B) SPECIAL RULES FOR CERTAIN TEM-
PORARY PROJECTS.— 
‘‘(i) IN GENERAL.—A building site or 
construction or installation project, or an 
installation or drilling rig or ship used for 
the exploration or exploitation of the sea bed 
and its subsoil and their natural resources, 
constitutes a permanent establishment only 
if it lasts, or the activities of the rig or ship 
lasts, for more than 12 months. 
‘‘(ii) DETERMINATION
OF
12-MONTH 
PERIOD.—For purposes of clause (i), the pe-
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
riod over which a building site or construc-
tion or installation project of a person lasts 
shall include any period of more than 30 
days during which such person does not 
carry on activities at such building site or 
construction or installation project but con-
nected activities are carried on at such 
building site or construction or installation 
project by one or more connected persons. 
‘‘(C) HABITUAL
EXERCISE
OF
CONTRACT 
AUTHORITY
TREATED
AS
PERMANENT
ESTAB-
LISHMENT.—Notwithstanding subparagraphs (A) 
and (B), where a person (other than an agent of 
an independent status to whom subparagraph 
(D)(ii) applies) is acting on behalf of a trade or 
business of a qualified resident of Taiwan and 
has and habitually exercises an authority to con-
clude contracts that are binding on the trade or 
business, that trade or business shall be deemed 
to have a permanent establishment in the coun-
try in which such authority is exercised in re-
spect of any activities that the person undertakes 
for the trade or business, unless the activities of 
such person are limited to those described in sub-
paragraph (D)(i) that, if exercised through a 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
fixed place of business, would not make this fixed 
place of business a permanent establishment 
under the provisions of that subparagraph. 
‘‘(D) EXCLUSIONS.— 
‘‘(i) IN
GENERAL.—Notwithstanding 
subparagraphs (A) and (B), the term ‘per-
manent establishment’ shall not include— 
‘‘(I) the use of facilities solely for 
the purpose of storage, display, or de-
livery of goods or merchandise belong-
ing to the trade or business, 
‘‘(II) the maintenance of a stock 
of goods or merchandise belonging to 
the trade or business solely for the pur-
pose of storage, display, or delivery, 
‘‘(III) the maintenance of a stock 
of goods or merchandise belonging to 
the trade or business solely for the pur-
pose of processing by another trade or 
business, 
‘‘(IV) the maintenance of a fixed 
place of business solely for the purpose 
of purchasing goods or merchandise, or 
of collecting information, for the trade 
or business, 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
‘‘(V) the maintenance of a fixed 
place of business solely for the purpose 
of carrying on, for the trade or busi-
ness, any other activity of a pre-
paratory or auxiliary character, or 
‘‘(VI) the maintenance of a fixed 
place of business solely for any com-
bination of the activities mentioned in 
subclauses (I) through (V), provided 
that the overall activity of the fixed 
place of business resulting from this 
combination is of a preparatory or 
auxiliary character. 
‘‘(ii) BROKERS
AND
OTHER
INDE-
PENDENT
AGENTS.—A trade or business 
shall not be considered to have a permanent 
establishment in a country merely because 
it carries on business in such country 
through a broker, general commission agent, 
or any other agent of an independent sta-
tus, provided that such persons are acting 
in the ordinary course of their business as 
independent agents. 
‘‘(3) TESTED GROUP.—The term ‘tested group’ 
includes, with respect to any entity taxed as a cor-
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00026
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
poration in Taiwan, such entity and any other entity 
taxed as a corporation in Taiwan that— 
‘‘(A) participates as a member with such 
entity in a tax consolidation, fiscal unity, or 
similar regime that requires members of the 
group to share profits or losses, or 
‘‘(B) shares losses with such entity pursuant 
to a group relief or other loss sharing regime. 
‘‘(4) CONNECTED PERSON.—Two persons shall be 
‘connected persons’ if one owns, directly or indirectly, 
at least 50 percent of the interests in the other (or, 
in the case of a corporation, at least 50 percent of the 
aggregate vote and value of the corporation’s shares) 
or another person owns, directly or indirectly, at least 
50 percent of the interests (or, in the case of a cor-
poration, at least 50 percent of the aggregate vote and 
value of the corporation’s shares) in each person. In 
any case, a person shall be connected to another if, 
based on all the relevant facts and circumstances, one 
has control of the other or both are under the control 
of the same person or persons. 
‘‘(5) FOREIGN COUNTRY OF CONCERN.—The term 
‘foreign country of concern’ has the meaning given 
such term under paragraph (7) of section 9901 of the 
William M. (Mac) Thornberry National Defense Au-
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00027
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
thorization Act for Fiscal Year 2021 (15 U.S.C. 
4651(7)), as added by section 103(a)(4) of the CHIPS 
Act of 2022). 
‘‘(6) PARTNERSHIPS; BENEFICIARIES
OF
ES-
TATES AND TRUSTS.—For purposes of this section— 
‘‘(A) a qualified resident of Taiwan which 
is a partner of a partnership which carries on 
a trade or business within the United States 
through a United States permanent establish-
ment shall be treated as carrying on such trade 
or business through such permanent establish-
ment, and 
‘‘(B) a qualified resident of Taiwan which 
is a beneficiary of an estate or trust which car-
ries on a trade or business within the United 
States through a United States permanent estab-
lishment shall be treated as carrying on such 
trade or business through such permanent estab-
lishment. 
‘‘(7) DENIAL OF BENEFITS FOR CERTAIN PAY-
MENTS THROUGH HYBRID ENTITIES.—For purposes of 
this section, rules similar to the rules of section 894(c) 
shall apply. 
‘‘(e) APPLICATION.— 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00028
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
‘‘(1) IN GENERAL.—This section shall not apply 
to any period unless the Secretary has determined 
that Taiwan has provided benefits to United States 
persons for such period that are reciprocal to the ben-
efits provided to qualified residents of Taiwan under 
this section. 
‘‘(2) PROVISION
OF
RECIPROCITY.—The Presi-
dent or his designee is authorized to exchange letters, 
enter into an agreement, or take other necessary and 
appropriate steps relative to Taiwan for the recip-
rocal provision of the benefits described in this sec-
tion. 
‘‘(f) REGULATIONS OR OTHER GUIDANCE.— 
‘‘(1) IN
GENERAL.—The Secretary shall issue 
such regulations or other guidance as may be nec-
essary or appropriate to carry out the provisions of 
this section, including such regulations or guidance 
for— 
‘‘(A) determining— 
‘‘(i) what constitutes a United States 
permanent establishment of a qualified resi-
dent of Taiwan, and 
‘‘(ii) income that is effectively con-
nected with such a permanent establish-
ment, 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00029
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
‘‘(B) preventing the abuse of the provisions 
of this section by persons who are not (or who 
should not be treated as) qualified residents of 
Taiwan, 
‘‘(C) requirements for record keeping and 
reporting, 
‘‘(D) rules to assist withholding agents or 
employers in determining whether a foreign per-
son is a qualified resident of Taiwan for pur-
poses of determining whether withholding or re-
porting is required for a payment (and, if with-
holding is required, whether it should be applied 
at a reduced rate), 
‘‘(E) 
the 
application 
of 
subsection 
(a)(1)(D)(i) to stock held by predecessor owners, 
‘‘(F) determining what amounts are to be 
treated as qualified wages for purposes of sub-
section (a)(2), 
‘‘(G) determining the amounts to which sub-
section (a)(3) applies, 
‘‘(H) defining established securities market 
for purposes of subsection (c), 
‘‘(I) the application of the rules of sub-
section (c)(4)(B), 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00030
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
‘‘(J) the application of subsection (d)(6) 
and section 1446, 
‘‘(K) determining ownership interests held 
by residents of a foreign country of concern, and 
‘‘(L) determining the starting and ending 
dates for periods with respect to the application 
of this section under subsection (e), which may 
be separate dates for taxes withheld at the source 
and other taxes. 
‘‘(2) REGULATIONS
TO
BE
CONSISTENT
WITH 
MODEL TREATY.—Any regulations or other guidance 
issued under this section shall, to the extent practical, 
be consistent with the provisions of the United States 
model income tax convention dated February 7, 
2016.’’. 
(b) CONFORMING
AMENDMENT
TO
WITHHOLDING 
TAX.—Subchapter A of chapter 3 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following 
new section: 
‘‘SEC. 1447. WITHHOLDING FOR QUALIFIED RESIDENTS OF 
TAIWAN. 
‘‘For reduced rates of withholding for certain residents 
of Taiwan, see section 894A.’’. 
(c) CLERICAL AMENDMENTS.— 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00031
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
(1) The table of sections for subpart D of part 
II of subchapter N of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by inserting after the 
item relating to section 894 the following new item: 
‘‘Sec. 894A. Special rules for qualified residents of Taiwan.’’. 
(2) The table of sections for subchapter A of 
chapter 3 of such Code is amended by adding at the 
end the following new item: 
‘‘Sec. 1447. Withholding for qualified residents of Taiwan.’’. 
TITLE II—UNITED STATES-TAI-
WAN 
TAX 
AGREEMENT 
AU-
THORIZATION ACT 
SEC. 201. SHORT TITLE. 
This title may be cited as the ‘‘United States-Taiwan 
Tax Agreement Authorization Act’’. 
SEC. 202. DEFINITIONS. 
In this title: 
(1) AGREEMENT.—The term ‘‘Agreement’’ means 
the tax agreement authorized by section 203(a). 
(2) 
APPROPRIATE
CONGRESSIONAL
COMMIT-
TEES.—The term ‘‘appropriate congressional commit-
tees’’ means— 
(A) the Committee on Foreign Relations 
and the Committee on Finance of the Senate; 
and 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00032
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
(B) the Committee on Ways and Means of 
the House of Representatives. 
(3) APPROVAL
LEGISLATION.—The term ‘‘ap-
proval legislation’’ means legislation that approves 
the Agreement. 
(4) IMPLEMENTING
LEGISLATION.—The term 
‘‘implementing legislation’’ means legislation that 
makes any changes to the Internal Revenue Code of 
1986 necessary to implement the Agreement. 
SEC. 203. AUTHORIZATION TO NEGOTIATE AND ENTER 
INTO AGREEMENT. 
(a) IN GENERAL.—Subsequent to a determination 
under section 894A(e)(1) of the Internal Revenue Code of 
1986 (as added by the United States-Taiwan Expedited 
Double-Tax Relief Act), the President is authorized to nego-
tiate and enter into a tax agreement relative to Taiwan. 
(b) ELEMENTS OF AGREEMENT.— 
(1) CONFORMITY WITH BILATERAL INCOME TAX 
CONVENTIONS.—The President shall ensure that— 
(A) any provisions included in the Agree-
ment conform with provisions customarily con-
tained in United States bilateral income tax 
conventions, as exemplified by the 2016 United 
States Model Income Tax Convention; and 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00033
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
(B) the Agreement does not include elements 
outside the scope of the 2016 United States 
Model Income Tax Convention. 
(2) INCORPORATION OF TAX AGREEMENTS AND 
LAWS.—Notwithstanding paragraph (1), the Agree-
ment may incorporate and restate provisions of any 
agreement, or existing United States law, addressing 
double taxation for residents of the United States and 
Taiwan. 
(3) AUTHORITY.—The Agreement shall include 
the following statement: ‘‘The Agreement is entered 
into pursuant to the United States-Taiwan Tax 
Agreement Authorization Act.’’ 
(4) ENTRY INTO FORCE.—The Agreement shall 
include a provision conditioning entry into force 
upon— 
(A) enactment of approval legislation and 
implementing legislation pursuant to section 
207; and 
(B) confirmation by the Secretary of the 
Treasury that the relevant authority in Taiwan 
has approved and taken appropriate steps re-
quired to implement the Agreement. 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00034
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
SEC. 204. CONSULTATIONS WITH CONGRESS. 
(a) NOTIFICATION UPON COMMENCEMENT OF NEGO-
TIATIONS.—The President shall provide written notification 
to the appropriate congressional committees of the com-
mencement of negotiations between the United States and 
Taiwan on the Agreement at least 15 calendar days before 
commencing such negotiations. 
(b) CONSULTATIONS DURING NEGOTIATIONS.— 
(1) BRIEFINGS.—Not later than 90 days after 
commencement of negotiations with respect to the 
Agreement, and every 180 days thereafter until the 
President enters into the Agreement, the President 
shall provide a briefing to the appropriate congres-
sional committees on the status of the negotiations, 
including a description of elements under negotiation. 
(2) MEETINGS AND OTHER CONSULTATIONS.— 
(A) IN GENERAL.—In the course of negotia-
tions with respect to the Agreement, the Sec-
retary of the Treasury, in coordination with the 
Secretary of State, shall— 
(i) meet, upon request, with the chair-
man or ranking member of any of the ap-
propriate congressional committees regard-
ing negotiating objectives and the status of 
negotiations in progress; and 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00035
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
(ii) consult closely and on a timely 
basis with, and keep fully apprised of the 
negotiations, the appropriate congressional 
committees. 
(B) ELEMENTS
OF
CONSULTATIONS.—The 
consultations described in subparagraph (A) 
shall include consultations with respect to— 
(i) the nature of the contemplated 
Agreement; 
(ii) how and to what extent the con-
templated Agreement is consistent with the 
elements set forth in section 203(b); and 
(iii) the implementation of the con-
templated Agreement, including— 
(I) the general effect of the con-
templated Agreement on existing laws; 
(II) proposed changes to any ex-
isting laws to implement the con-
templated Agreement; and 
(III) proposed administrative ac-
tions to implement the contemplated 
Agreement. 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00036
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988
SEC. 205. APPROVAL AND IMPLEMENTATION OF AGREE-
MENT. 
(a) IN GENERAL.—The Agreement may not enter into 
force unless— 
(1) the President, at least 60 days before the day 
on which the President enters into the Agreement, 
publishes the text of the contemplated Agreement on 
a publicly available website of the Department of the 
Treasury; and 
(2) there is enacted into law, with respect to the 
Agreement, approval legislation and implementing 
legislation pursuant to section 207. 
(b) ENTRY INTO FORCE.—The President may provide 
for the Agreement to enter into force upon— 
(1) enactment of approval legislation and imple-
menting legislation pursuant to section 207; and 
(2) confirmation by the Secretary of the Treas-
ury that the relevant authority in Taiwan has ap-
proved and taken appropriate steps required to imple-
ment the Agreement. 
SEC. 206. SUBMISSION TO CONGRESS OF AGREEMENT AND 
IMPLEMENTATION POLICY. 
(a) SUBMISSION OF AGREEMENT.—Not later than 270 
days after the President enters into the Agreement, the 
President or the President’s designee shall submit to Con-
gress— 
VerDate Sep 11 2014 
20:24 Dec 14, 2023
Jkt 049200
PO 00000
Frm 00037
Fmt 6652
Sfmt 6203
E:\BILLS\H5988.RH
H5988