To amend the Internal Revenue Code of 1986 to provide special rules for the taxation of certain residents of Taiwan with income from sources within the United States.

This bill has two titles. Title I creates special, reduced U.S. tax rates for certain residents of Taiwan on U.S.-source income like interest, dividends, and royalties, and exempts some wages and entertainment income. Title II authorizes the President to negotiate a formal tax agreement with Taiwan, subject to congressional approval.

Sec. 102, Special rules for taxation of certain residents of Taiwan: This section adds a new Internal Revenue Code section 894A. For a "qualified resident of Taiwan," the U.S. withholding tax rate on interest, dividends, and royalties is generally reduced to 10%, with a 15% rate (or 10% for certain corporate dividends) on dividends. Certain wages paid by non-U.S. employers to non-resident Taiwanese workers are tax-free. Entertainers and athletes from Taiwan can earn up to $30,000 tax-free from U.S. performances. Income connected to a U.S. permanent establishment of a Taiwanese resident is taxed at regular corporate or individual rates, with a reduced 10% branch profits tax. A "qualified resident of Taiwan" is defined as a person liable to tax in Taiwan, not a U.S. person, and, for corporations, meeting ownership, publicly traded, or subsidiary tests to prevent treaty shopping. Dual-resident individuals may be treated as Taiwanese residents under certain conditions.

Sec. 203, Authorization to negotiate and enter into agreement: The President is authorized to negotiate and enter into a tax agreement with Taiwan, but only after a determination under the new section 894A(e)(1). The agreement must conform to the 2016 U.S. Model Income Tax Convention and cannot include elements outside its scope, though it may incorporate existing U.S. law. The agreement must state it is entered into under this Act and can only take effect after Congress enacts approval and implementing legislation and Taiwan confirms its approval.

Sec. 204, Consultations with Congress: The President must notify Congress at least 15 days before starting negotiations and provide briefings every 180 days. The Treasury Secretary must meet with and consult congressional committees on the agreement's nature, consistency with the model convention, and implementation.

Sec. 205, Approval and implementation of agreement: The agreement cannot enter into force unless the President publishes its text on a Treasury website at least 60 days before signing it, and Congress enacts approval and implementing legislation. The President can then bring it into force after Taiwan confirms its approval.

Sec. 206, Submission to Congress of agreement and implementation policy: Within 270 days of signing, the President must submit the final text and a technical explanation to Congress. The Treasury Secretary must also submit a description of needed law changes and anticipated administrative actions.

Sec. 207, Consideration of approval legislation and implementing legislation: The approval legislation must state that Congress approves the agreement. In the Senate, approval legislation goes to Foreign Relations; implementing legislation goes to Finance. In the House, both go to Ways and Means.

Sec. 208, Relationship of agreement to Internal Revenue Code of 1986: The Internal Revenue Code controls over any inconsistent provision of the agreement or approval legislation. The title does not amend U.S. law unless specifically provided.

Sec. 209, Authorization of subsequent tax agreements relative to Taiwan: After the first agreement is approved, the President can negotiate supplemental or superseding agreements, with the same requirements applying separately to each.

Sec. 210, United States treatment of double taxation matters with respect to Taiwan: Congress finds that the U.S. normally uses tax treaties with sovereign states, but Taiwan's unique status prevents a treaty. The policy is to provide additional tax relief only after a formal agreement enters into force, while continuing to use treaties with sovereign states.