Executive Yuan of Republic of China Taiwan : 2018-01-04Premier calls for tax treaty following US passage of tax bill

Premier Lai Ching-te today directed the Ministry of Finance to step up efforts in signing a Taiwan-U.S. tax treaty to reinforce supply chain links between the two countries and open up more trade opportunities for the future. The premier made the remarks following a National Development Council (NDC) briefing on Taiwan's strategic responses to last month's passage of a landmark tax bill in the U.S.

With the new tax code expected to bring about sweeping changes to tax principles for multinational corporations, a tax treaty would eliminate double taxation and reduce barriers on the movements of people, capital, goods and services. It would also promote the growth of bilateral investment and trade between Taiwan and U.S., the premier added.

The tax reform will likely affect the overseas operations of Taiwanese businesses given that the U.S. is one of Taiwan's most important trading partners and sources of technology, Premier Lai continued. He asked the Ministry of Economic Affairs to monitor ongoing developments in order to identify business opportunities, promote Taiwan-U.S. cooperation, and help Taiwanese firms respond and adjust to changes. The central bank and the Financial Supervisory Commission should also keep close tabs on financial market fluctuations at home and abroad and stand ready to adopt appropriate financial strategies and response measures.

The NDC said in its report that the U.S. tax reform will have financial and tax implications for Taiwanese firms operating abroad as well as Taiwan's economy as a whole. Response strategies include improving the domestic investment climate, pursuing a tax treaty with the U.S., optimizing Taiwan's tax system, developing more exports to the U.S., cultivating robust economic and trade ties, stabilizing financial markets, spurring domestic demand and creating new investment opportunities.

Taiwan has maintained a healthy international balance of payments with a surplus in current accounts and an abundance of foreign reserves. Taiwan also has very little external debt, while New Taiwan dollar foreign exchange rates have remained steady, so it has an excellent ability to handle international capital flows as compared with other Asian countries, the NDC said.