Summary

Creates a new U.S. tax rule that gives reduced withholding and special U.S.-source income treatment to qualifying residents of Taiwan, but only when Taiwan grants matching benefits and the Treasury Secretary affirms reciprocity. It sets specific withholding rates, eligibility tests, and documentation rules for individuals and corporations, directs Treasury to issue regulations consistent with the U.S. Model Income Tax Convention, and authorizes the President to negotiate a formal tax agreement with Taiwan subject to congressional consultation and required congressional implementing legislation.

• Creates a new special U.S. tax regime for qualifying residents of Taiwan, providing reduced withholding and special U.S.-source income treatment.
• Benefits apply only after the Treasury Secretary determines Taiwan has provided reciprocal benefits to U.S. residents.
• Sets concrete rates and thresholds: generally 10% withholding, 15% for dividends (with a 10% dividend rate under some ownership tests), and a $30,000 entertainer/athlete exemption.
• Imposes ownership, holding-period, and activity tests (including 12-month holding, 10% direct ownership for dividends, and corporate 50% ownership/related-party income tests) to limit benefits.
• Requires Treasury regulations consistent with the 2016 U.S. Model Income Tax Convention where practical.
• Authorizes the President to negotiate and enter a bilateral tax agreement with Taiwan, but the Agreement cannot take effect absent congressional approval and implementing legislation.
• Mandates substantial congressional consultation, notice, public posting, and post-agreement transmittals to Congress before the Agreement can enter into force.
• Affirms that the Agreement and implementing legislation must operate within the Internal Revenue Code and disclaims intent to change U.S. tax law outside the specified process.