Taiwan

Leading firms

Tier 1
Deloitte 
EY 
KPMG 
PwC 
Tier 2
Grant Thornton 
Lee & Li 

Market overview

Taiwan's Ministry of Finance (MOF) has been taking action to tackle tax avoidance in the country and BEPS has been part of the MOF's guiding framework.

Taiwan is not formally participating in the automatic exchange of information under BEPS. However, to improve tax transparency, the MOF has amended its tax collection laws to take into account the exchange of tax-related information between Taiwan and other countries. This also prevents Taiwan from being categorised as a non-cooperative jurisdiction by other countries or the OECD. The amendments include the reciprocal information exchange agreements with other jurisdictions and scope of information exchanges. Taiwan has signed 32 tax agreements with other jurisdictions that contain a provision on exchange of information.

While the MOF's actions are motivated by compliance with the BEPS project, information about Taiwanese tax affairs in the Panama Papers has also contributed to spurring the government into action. The 2016 revelations included the financial transactions of Taiwan's Mega Commercial International Bank. This resulted in the bank being penalised with a fine by Taiwan's Financial Supervisory Commission.

To address tax avoidance by businesses and individuals, the Taiwanese government has implemented two anti-avoidance tools: controlled foreign company (CFC) regulations and place of effective management (PEM) rules. However, in consideration of the impact on Taiwanese businesses, the MOF decided that the date of the implementation for the CFC and PEM rules will be conditional on the effective date of a tax agreement between Taiwan and China and the status of the common reporting standard, among other things.

The MOF has indicated that it will amend its TP regulation to mirror BEPS Action 13 for the preparation of the master file and country-by-country reporting. An announcement regarding the timeframe for implementation is expected in the near future. The Taiwanese government is also trying to speed up TP audits, focusing on foreign-owned enterprises.


Tax authorities

National Taxation Bureau of Taipei
No 2, Section 1, Jhonghua Road, Wanhua District, Taipei 10802
Tel: +886 2 2311 3711 ext. 1116
Fax: +866 2 2389 1052
Website: www.ntbt.gov.tw/etwen/

Taxation Agency, Ministry of Finance
2, Aiguo W. Road, Taipei, 10066
Tel: +886 2 2322 8000
Fax: +866 2 2396 9038
Website: www.dot.gov.tw/en/


Tax rates at a glance

(As of August 2017)

Corporate income tax rate 17%
Capital gains tax rate 17% (a)
Branch tax rate 17%
 
Withholding tax
Dividends
Paid to residents 0%
Paid to non-resident corporations and individuals 20% (b)
Interest
Paid to resident corporations 10% (c)
Paid to resident individuals 10% (d)
Paid to non-resident corporations and individuals 15/20% (e)
Royalties
Paid to resident corporations and individuals 10% (f)
Paid to non-resident corporations and individuals 20%
Branch remittance tax 0%
 
Net operating losses (years)
Carryback 0
Carryforward 10

  1. Effective from January 1 1990, income from securities transactions is not subject to regular corporate income tax. Such income is subject to alternative minimum tax.
  2. For details and the definition of a non-resident corporation.
  3. Payments in connection with securities issued under the Financial Asset Securitisation Act or Real Estate Securitisation Act and interest derived from short-term commercial paper are subject to a 10% withholding tax. In addition, they are included in the computation of the resident corporation's taxable income and are taxed at a rate of 17%.
  4. Interest arising from short-term commercial paper, asset-backed securities, bonds, structured products and repurchase agreements underlying such financial instruments is not included in the tax computation in a resident individual's tax return but is subject to a 10% withholding tax.
  5. The applicable tax rate for interest arising from short-term commercial paper, asset-backed securities, bonds, structured products and interest arising from repurchase agreements is 15%. Other types of interest are subject to a tax rate of 20%.
  6. The withholding of tax is not required if the licensor issues a Government Uniform Invoice (GUI).

Source: EY 2017 Worldwide Corporate Tax Guide and Deloitte