American business organisations in Taiwan expressed cautious optimism Monday that long-stalled bilateral income tax negotiations may gain momentum, citing the improved diplomatic foundation created by the Agreement on Reciprocal Trade signed in January 2026, which reduced US tariffs on Taiwanese goods below 15% and established a more constructive framework for broader economic engagement.

  • The Agreement on Reciprocal Trade, signed in January 2026, reduced US tariffs on Taiwanese goods below 15% from 20% and saw Taiwan commit to at least $250 billion in US semiconductor, energy, and AI investments.
  • No bilateral income tax treaty currently exists between the US and Taiwan, creating a structural disadvantage for US companies relative to competitors from treaty jurisdictions.
  • Business group representatives described the ART as an opportunity to advance the tax framework, while acknowledging that progress has been described as underway for many years without producing a finalised agreement.
  • Congressional approval is required for any formal treaty, a legislative process that has historically extended comparable agreements by several years.

The bilateral tax framework discussion is gaining salience against a backdrop of intensified US-Taiwan semiconductor cooperation. Under the January trade agreement, Taiwanese technology companies committed to direct investments of at least $250 billion in US semiconductor, energy, and AI sectors, with an additional $250 billion in credit guarantees for US semiconductor ecosystem development. That level of bilateral commercial engagement strengthens the practical case for eliminating duplicate taxation.

A formal tax treaty would remove a friction that currently disadvantages US companies relative to competitors from the European Union, Japan, and other jurisdictions that have bilateral arrangements with Taiwan. The competitive distortion is most visible in the context of major semiconductor manufacturers where capital allocation decisions are sensitive to effective tax rate differences.

Business group representatives characterised the improved bilateral climate following the ART as genuinely better than the environment a year ago when broad tariff announcements created uncertainty, while tempering optimism about the speed of any formal treaty process.