Global Daily Tax News, US Senate Rejects Legislation To Establish Taiwanese DTA, (Aug 5, 2024)

The US Senate has voted against adoption of The Tax Relief for American Workers and Families Act.

The legislation would have made considerable enhancements to the child tax credit and would have restored tax breaks for small businesses' investments in research and development.

The legislation also includes provisions to bring the double tax agreement secured with Taiwan into effect, to lower rates of withholding tax on cross-border passive income. It would have generally capped withholding taxes payable at source on outbound income at 10 percent for interest, royalties, and gains, and 15 percent for dividends.

A concessionary 10 percent rate of tax for dividends was to be introduced for a recipient that directly owns at least 10 percent of the vote and value of the total outstanding shares of stock in the corporation paying the dividend for an uninterrupted period of 12 months ending on the date on which the stock in a corporation becomes ex-dividend with respect to such dividend. Dividends paid by RICs and REITs were to be specifically excluded.

The rejection of the bill in the Senate came despite resounding bipartisan support for the legislation from the House earlier this year, when the bill secured 357 votes in favor and 70 against.