Senators Promote Tax Benefits for Taiwanese Artists and Athletes

Senators Catherine Cortez and Marsha Blackburn, representing cities with important music and entertainment industries, have proposed a bill to support Taiwanese artists and athletes (including esports players) by providing them with favorable tax treatment. 

The Senate Finance Committee agreed to add a section to its legislation to eliminate double taxation for Taiwanese businesses, investors, and workers, especially entertainers and athletes. This change in legislation would exempt Taiwanese musicians, artists, and athletes from paying taxes in the US if they earn USD 30,000 or less, nevertheless, this benefit depends on Taiwan offering the same benefit to U.S. entertainers and athletes.

Senator Catherine Cortez advocates for Nevada’s tourism and entertainment industries, which include Las Vegas. She aims to prevent overtaxing artists and entertainers with double taxation, and her support for the bill seeks to help the entertainment and music industries.

The bill provides Taiwan with tax treaty-like benefits. However, it still requires the resolution of jurisdictional disputes with the Foreign Relations Panel. 

In the Finance Committee’s opinion, this is a beneficial bill that is seen as an alternative to a formal treaty to avoid overhanging the US tax code. In addition to reflecting their commitment to their home-state interests, like the states of Nevada and Tennessee. The bill has the support of both parties and seeks to strengthen ties between the US and Taiwan.

Current Regulation

As of now, if you are a nonresident athlete or entertainer performing independent personal services in the US, you generally pay US income tax on income generated in the US. This includes compensation for performances, endorsements, the sale of merchandise, and royalty or other income closely related to the event. 

You are also required to file a US federal income tax return to report and pay any US tax. Generally, if you are a non-resident athlete or entertainer performing independent personal services or participating in events in the United States, you are subject to the following special tax:¹

• Payments to NRA athletes and entertainers are subject to special withholding rules. Refer to Artists and Athletes (Income Code 20) in Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities.
• A Central Withholding Agreement (CWA) is a tool that can help reduce withholding for NRA athletes and entertainers who plan to work in the United States. A CWA provides for the correct amount of withholding based upon net income.
• Prior to filing a U.S. tax return, foreign athletes and entertainers must determine their U.S. Tax Residency Status
• A Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN) must be furnished on tax returns, statements, and other tax related documents. In general, only non-citizens, who have permission to work from the Department of Homeland Security, can apply for a Social Security number. Other NRAs must apply for an Individual Taxpayer Identification Number (ITIN)

1. https://www.irs.gov/individuals/international-taxpayers/taxation-of-foreign-athletes-and-entertainers ↩︎

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