INTERNATIONAL TAX: Taiwan envoy says no agreement on 'double taxation' with US hinders business.

As published on taiwannews.com.tw, Wednesday 31 May, 2023.

Taiwan's envoy to the U.S., Hsiao Bi-khim (蕭美琴), said there is no double taxation agreement between Taipei and Washington, which is hindering Taiwanese semiconductor companies from investing in the United States.

Hsiao hoped negotiations between the two countries would lead to an agreement on double taxation. She made the remarks during a breakfast meeting hosted by the Christian Science Monitor on Tuesday (May 30), per UDN.

"Among the top 10 U.S. trading partners, Taiwan is the only partner that does not have a tax treaty that avoids double taxation. Therefore, Taiwanese businesses who have made investments in the U.S., including those in the semiconductor business, are paying more in U.S. taxes than other foreign businesses, which is unfair,” said Hsiao.

Hsiao noted the success of the recent Taiwan-U.S. 21st Century Trade Initiative negotiations, expressing hope that talks could be extended, including a framework for future agreements with more trading partners.

"Taiwan hopes this agreement will lay the groundwork for more comprehensive agreements in the future, demonstrating our commitment to high trade standards and our willingness to strike deals with other like-minded trading partners," said Hsiao.

Hsiao said the recent round of agreements, however, did not include important areas of negotiations such as tariffs. She believes the U.S. and Taiwan must move toward this topic in the second phase of talks.

As for the Biden administration's regional trade initiative, the Indo-Pacific Economic Framework, Hsiao expressed regret that Taiwan was excluded from negotiations, noting that Taiwan is a mature democratic country that is certainly eligible for participation.

“It’s very disappointing not to be included, and we will continue to advocate and pursue opportunities to not only develop strong bilateral partnerships, but also expand a regional foothold and move beyond," said Hsiao.

Regarding Taiwan's security issues, Hsiao said Taiwan was learning lessons from Russia's invasion of Ukraine, noting the success of the Stinger and Javelin missile systems and the widespread use of drones.

"Our priority is to learn lessons that will help strengthen our continued existence as a democracy free from coercion. Our greatest hope is that Beijing also learns the lesson that aggressions will not succeed because they will be met with huge international obstacles,” said Hsiao.

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