Rand Paul holds up tax bill that is priority for US-Taiwan economic ties

Sen. Rand Paul (R-Ky) on Thursday held up legislation that would ease tax burdens on businesses operating in both Taiwan and the U.S., a key priority as both sides seek to strengthen economic ties in the face of aggression from the People’s Republic of China.

The legislation, called the Taiwan Tax Agreement Act of 2023, would authorize the Biden administration to negotiate and conclude a tax agreement with Taiwan.

Paul said he has concerns over protecting privacy for American taxpayers with the legislation.

“We’ve had problems with the bulk exchange of data without individualizing,” he told The Hill.

Paul in general is critical of provisions in tax treaties that provide a low standard for the U.S. to obtain the financial records of Americans living abroad.

“We don’t want them collecting everybody’s tax records. We’ve been opposed to all the tax treaties,” Paul said to The Hill.

Lawmakers on the committee said they expect the bill to come up in its next business meeting, likely before the July Fourth holiday.

The bipartisan bill is sponsored by the chair and ranking member of the Senate Foreign Relations Committee, Sens. Bob Menendez (D-N.J.) and Jim Risch (R-Idaho), and is viewed as an important area for the U.S. to support Taiwan in the face of aggression from China.

Beijing is expected to apply pressure militarily, economically and diplomatically in the years ahead to bring Taiwan under its control.

“In the face of mounting coercive tactics by Beijing to thwart Taiwan’s international economic engagement, this effort to facilitate U.S.-Taiwan economic relations is more crucial than ever,” Menendez said in a statement when introducing the bill last month.

The legislation is a particular priority for Taipei, which wants to eliminate “double taxation” on businesses — especially semiconductor firms — that operate in the U.S. and Taiwan.

Taiwan is responsible for more than 90 percent of production of the most advanced parts of semiconductors, the computer chips that are found in nearly all electronic devices.

Taiwan’s most prominent chip producer, the Taiwan Semiconductor Manufacturing Company, approved a plan in February to open a chip plant in Arizona, with the company investing $40 billion into the project.

“Having a tax agreement that avoids double taxation, allowing Taiwanese businesses to compete on fair grounds, allowing them to report back to their shareholders in Taiwan that an investment in the United States is actually profitable, I think that’s very important,” Taiwan’s Representative to the U.S., Hsiao Bi-khim, said in a discussion hosted by the Christian Science Monitor in late May.

But Hsaio raised concern that the cost of production is higher in the U.S. and that could translate to higher costs for consumers.

“The chip industry is a very important component of Taiwan’s broader economic resilience,” she said.

“I think Taiwan will continue to be indispensable and irreplaceable part of critical supply chains. and Taiwan will remain the most competitive place for making chips in the world, including those advanced chips.”

For the latest news, weather, sports, and streaming video, head to The Hill.