© Reuters. Flags of Taiwan and U.S. are placed for a meeting between U.S. House Foreign Affairs Committee Chairman Ed Royce speaks and with Su Chia-chyuan, President of the Legislative Yuan in Taipei, Taiwan March 27, 2018. REUTERS/Tyrone Siu/File Photo
TAIPEI (Reuters) – Taiwan hopes to reach a long-mooted tax agreement with the United States next year, Finance Minister Chuang Tsui-yun said on Wednesday, which both sides have said will foster more investment and Taipei has long pushed for.
Republican and Democratic members of the U.S. House of Representatives introduced legislation in July that would authorize President Joe Biden’s administration to negotiate the tax agreement with Taiwan.
The lawmakers said the agreement, similar to a treaty, would facilitate investment, protect against tax evasion and allow businesses in both the United States and Taiwan to avoid double taxation.
Chuang, taking questions in parliament, said she would take advantage of attending a meeting of the Asia Pacific Economic Cooperation, or APEC, grouping next month in the United States to discuss the plan with U.S. Treasury Secretary Janet Yellen.
Chuang said the focus of the agreement is to resolve issues such as double taxation of personal income and corporate profits, and if signed, it will create a better environment to attract more investment.
“We hope that it can be signed before June next year. After signing it, the procedures on our side can be completed soon and the bilateral agreement will take effect,” she said.
Taiwanese companies have cumulatively invested $28.5 billion in the United States and U.S. companies have invested $26.6 billion in Taiwan, Chuang said.
Washington and Taipei do not have formal diplomatic relations, so the lack of a tax agreement means Taiwanese businesses and individuals are taxed on their income by both the U.S. and Taiwanese governments.
Taiwan is a major global supplier of the semiconductor chips essential to a wide range of consumer goods and military equipment. Washington has been keen to get Taiwanese chip companies to build factories in the U.S.
Taiwan Semiconductor Manufacturing Co Ltd, the world’s largest contract chipmaker, is investing $40 billion in factories in the U.S. state of Arizona.