LCY Technology Corp (4989.TT)

[bioaq_sh]

After reading the following April 2023 article qouting LCY about double taxation between both Taiwan & the US, I can't but help think about the value of a certain company's NOLS, which shares are only suspended, not cancelled.

https://www.msn.com/en-us/money/other/double-tax-hinders-taiwan-s-investment-in-american-factories/ar-AA1aqp8L

Article linked above is copied out below;

"WASHINGTON—Bowei Lee’s chemical company wants to open a new American factory to make materials for semiconductors, exactly the type of investment U.S. officials are courting as they seek to shore up chip supply chains and boost domestic manufacturing.

But the Taiwan-based firm, LCY Group, faces a problem: Earnings from the new factory would be taxed twice.

A “double tax” conundrum involving Taiwanese businesses operating on American soil is straining business ties between the U.S. and Taiwan, a technology manufacturing powerhouse and central player in Washington’s plan to counter the rise of China and strengthen U.S. supply chains.

“It’s a big impediment to Taiwanese investments,” said Mr. Lee, chairman of LCY, which supplies materials to Taiwan Semiconductor Manufacturing Co., the huge chip maker that is building its own new facility in Phoenix. “Countries such as Canada and Germany have signed a double taxation treaty with Taiwan, but the U.S. has been very slow at that.”

Despite maintaining robust bilateral relations with Taiwan, the U.S. doesn’t have a formal diplomatic relationship with the island, which China considers part of its sovereign territory. In contrast to arrangements the U.S. has with all its other top trading partners—including China, South Korea, Japan and the European Union—Washington lacks a formal tax treaty with Taiwan.

Since a treaty is typically signed between countries with diplomatic ties, the spokesman for China’s Embassy in Washington, Liu Pengyu, said Beijing has urged the U.S. to cease “all forms of official interaction with Taiwan.”

The lack of a U.S. tax treaty with Taiwan means that Taiwanese businesses and individuals in the U.S. are taxed on their income by both governments and face higher rates for some other taxes.

Taiwan and its political allies are pressing the Biden administration to address the double tax problem.

“The lack of a tax treaty between Taiwan and the U.S. is making it very difficult for Taiwanese businesses to expand and operate in the U.S.,” Bi-khim Hsiao, Taiwan’s de facto ambassador to the U.S., said in a statement.

A new tax treaty would require congressional approval. Last month, a bipartisan group of six U.S. senators introduced a resolution calling on the Biden administration to start negotiating one.

But the Biden administration has yet to commit to address the tax issue.

In response to a question at a House hearing last month, Treasury Secretary Janet Yellen said her department and the State Department will look into the double taxation issue. “I do recognize that this is a very significant problem that we really need to explore ways to deal with,” she said.

While Taiwan has long-pressed the U.S. for a tax treaty, the issue has gained urgency due to an expected surge in Taiwanese investments in the U.S. propelled by the Chips Act. That 2022 law created generous incentives to ensure the U.S. has a domestic semiconductor industry that can compete with China’s and reduce reliance on imports from geopolitically vulnerable places such as Taiwan and South Korea.

Attracting investments from TSMC and its suppliers from Taiwan is particularly important, given that the U.S. relies on TSMC for more than 90% of its needs for the most sophisticated semiconductors. “That’s a vulnerability that’s unsustainable,” Commerce Secretary Gina Raimondo said in February.

To enhance economic ties with Taiwan, the two sides are also negotiating a new trade agreement. A record number of Taiwanese companies attended the U.S. government’s annual investment fair last year.

A spokeswoman for TSMC declined to comment on how the tax issue may affect its investment decision for the Phoenix facility, which is counting on generous financial support from the U.S. government as part of the Chips Act.

She said TSMC doesn’t take a position on double taxation. The company told the Commerce Department in a comment letter last year that the lack of a tax treaty has made it difficult for some of its Taiwanese suppliers to build new U.S. factories.

LCY, the TSMC supplier, currently has a production site in Texas. Mr. Lee said the new facility would pay federal, state and possibly municipal taxes and face a 30% withholding tax on its after-tax earnings if the money is remitted back home. In Taiwan, it would also pay a corporate tax and an individual dividend tax, he said.

Some Taiwanese companies have jumped through hoops to minimize their tax burdens.

For Advantech Co., a Taiwanese maker of industrial computers used for factory automation, U.S. sales now make up roughly 30% of revenue. To avoid double taxation, the company has opted to invest those earnings in the U.S. or Latin America, rather than sending profits home.

“This really distorts our corporate finance management,” said Chaney Ho, Advantech’s co-founder and a board director.

The high withholding tax, which reduces the amount of funds available for dividends, has also discouraged Advantech from increasing dividend payouts to shareholders, some 40% of whom are now American and other foreign investors. “It’s rather ridiculous that we make more money in the U.S., but we can’t pay dividends to the investors,” Mr. Ho said."