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Principal Tax Contact
Heidi Liu +886 (2) 2757-8888, Ext. 88858 Mobile: +886 955-427-298 Email: heidi.liu@tw.ey.com
International Tax and Transaction Services – International Corporate Tax Advisory
Yishian Lin +886 (2) 2757-8888, Ext. 88870 Mobile: +886 972-293-669 Email: yishian.lin@tw.ey.com
Sophie Chou +886 (2) 2757-8888, Ext. 88872 Mobile: +886 972-977-900 Email: sophie.chou@tw.ey.com
International Tax and Transaction Services – Transfer Pricing
George Chou +886 (2) 2757-8888, Ext. 88871 Mobile: +886 972-695-928 Email: george.chou@tw.ey.com
Sophie Chou +886 (2) 2757-8888, Ext. 88872 Mobile: +886 972-977-900 Email: sophie.chou@tw.ey.com
Chien-Hua Yang +886 (2) 2757-8888, Ext. 88875 Mobile: +886 910-685-290 Email: chienhua.yang@tw.ey.com
Sean Lin +886 (2) 2757-8888, Ext. 67076 Mobile: +886 972-699-546 Email: sean.lin@tw.ey.com
Business Tax Services
Heidi Liu +886 (2) 2757-8888, Ext. 88858 Mobile: +886 955-427-298 Email: heidi.liu@tw.ey.com
Chien-Hua Yang +886 (2) 2757-8888, Ext. 88875 Mobile: +886 910-685-290 Email: chienhua.yang@tw.ey.com
Anna Tsai +886 (2) 2757-8888, Ext. 88873 Mobile: +886 922-682-702 Email: anna.tsai@tw.ey.com
Ben Wu +886 (7) 238-0011, Ext. 88990 Mobile: +886 972-694-889 Email: ben.wu@tw.ey.com
Ann Shen, +886 (2) 2757-8888, Ext. 88877
Tax and Regulatory Mobile: +886 913-391-337 Compliance Services Email: ann.shen@tw.ey.com
Michael Lin, +886 (2) 2757-8888, Ext. 88876
Tax and Regulatory Mobile: +886 939-347-562 Compliance Services Email: michael.lin@tw.ey.com
Kelvin Tsao, +886 (2) 2757-8888, Ext. 67151 Global Compliance and Reporting
Mobile: +886 972-694-700 Services Email: kelvin.tsao@tw.ey.com
International Tax and Transaction Services – Transaction Tax Advisory
Sophie Chou +886 (2) 2757-8888, Ext. 88872 Mobile: +886 972-977-900 Email: sophie.chou@tw.ey.com
People Advisory Services
Heidi Liu +886 (2) 2757-8888, Ext. 88858
Mobile: +886 955-427-298 Email: heidi.liu@tw.ey.com
Indirect Tax
Vivian Wu
Legal Services
Helen Fang
+886 (2) 2757-8888, Ext. 88833 Mobile: +886 975-350-561 Email: vivian.wu@tw.ey.com
+886 (2) 2757-8888, Ext. 88861 Mobile: +886 936-131-772 Email: helen.fang@tw.ey.com
KW Chueh +886 (2) 2757-8888, Ext. 88860 Mobile: +886 939-637-175 Email: kw.chueh@tw.ey.com
A. At a glance
Corporate Income Tax Rate (%) 20 (a)
Capital Gains Tax Rate (%) 20 (a)(b)
Branch Tax Rate (%) 20 (a)
Withholding Tax (%) Dividends
Paid to Residents 0
Paid to Nonresident Corporations and Individuals 21 (c) Interest
Paid to Resident Corporations 10 (d) Paid to Resident Individuals 10 (e) Paid to Nonresident Corporations and Individuals 15/20 (f) Royalties
Paid to Resident Corporations and Individuals 10 (g) Paid to Nonresident Corporations and Individuals 20
Branch Remittance Tax 0
Net Operating Losses (Years)
Carryback 0
Carryforward 10
(a) For details, see Section B. (b) Effective from 1 January 1990, income from securities transactions is not subject to regular corporate income tax. Such income is subject to alternative minimum tax. See Section B. (c) For details and the definition of a nonresident corporation, see Section B. (d) Payments in connection with securities issued under the Financial Asset Securitization Act or Real Estate Securitization Act and interest derived from short-term commercial paper are subject to a 10% withholding tax. In addi tion, they are included in the computation of the resident corporation’s tax able income and are taxed at a rate of 20%.
(e) Interest arising from short-term commercial paper, asset-backed securities, bonds, structured products and repurchase agreements underlying such fi nancial instruments is not included in the tax computation in a resident indi vidual’s tax return but is subject to a 10% withholding tax.
(f) 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%.
(g) The withholding of tax is not required if the licensor issues a Government Uniform Invoice (GUI).
B. Taxes on corporate income and gains
Corporate income tax. A domestic profit-seeking enterprise is subject to corporate income tax on all of its income regardless of source. All profit-seeking enterprises, including subsidiaries of foreign companies that are incorporated under the Company Law of Taiwan, are considered domestic profit-seeking enterprises. A foreign profit-seeking enterprise is subject to tax only on income sourced in Taiwan.
Place of effective management. Taiwan introduced an act containing a place of effective management regime in July 2016. Under the act, a company is regarded as tax resident in Taiwan if it is effectively managed in Taiwan. “Effective management” refers to the situation in which the company’s critical decisions are made in Taiwan, accounting and legal records are kept in Taiwan, and major business activities are executed in Taiwan. However, this act has not yet entered into force. The Executive Yuan will decide the effective date of the act.
Tax rates. The rate is 20% (increased from 17%) for tax years starting on or after 1 January 2018. For enterprises with taxable income not exceeding TWD500,000, the corporate income tax rate was 18% for 2018 and 19% for 2019.
Alternative minimum tax. The alternative minimum tax (AMT) applies to domestic profit-seeking enterprises and foreign profitseeking enterprises that have a fixed place of business or business agent in Taiwan, if the enterprise’s base income exceeds TWD500,000. The AMT is calculated in accordance with the following formula:
AMT = (basic income – deduction of TWD500,000) × 12%
Basic income equals the sum of the following items:
• Taxable income
• Tax-exempt income under the Statute for Upgrading Industries and other tax-incentive regulations
• Income from transactions in securities and futures
• Tax-exempt income of offshore banking units
If the regular income tax equals or exceeds the AMT, only the regular income tax is payable. The regular income tax equals tax payable calculated under the Income Tax Law, less tax credits. If the regular income tax is less than the AMT, the difference between regular income tax and the AMT is payable in addition to the regular income tax. The additional tax payment cannot be offset by tax credits.
Tax incentives. A new Statute for Industry Innovation (SII) was announced and published on 12 May 2010 to replace the old Statute for Upgrading Industries (SUI), which expired on 31 December 2009. In comparison to the SUI, the SII retains only the tax incentive for expenditure spent on research and development (R&D) activities and offers other non-tax subsidies
for various qualified activities. Under the SII, enterprises may claim up to 15% of their R&D expenditures as a credit to offset against their corporate income tax payable in the current year only or claim up to 10% of their R&D expenditures as a credit to offset against their corporate income tax payable in three years, with a maximum credit of 30% of the tax payable. The SII is effective from 1 January 2010 through 31 December 2029. The tax incentives obtained before the expiration of SUI remain effective after the expiration of SUI. Amendments were made to the SII in November 2017. Under the amendments, a venture capital limited partnership started from 2017 to 2029 that meets some requirements and obtains the regulator’s approval can be treated as a pass-through entity rather than as a taxable corporate entity for 10 years from its startup. Under an amendment made to the SII in July 2018, from 2018, profit-seeking enterprises may use their undistributed earnings to construct or purchase buildings, software or hardware equipment, or technology for their operation, as needed, within three years after the year in which such earnings are derived. This investment can be deducted from the undistributed earnings in the current year’s undistributed earnings calculation under Article 66-9 of the Income Tax Act.
In addition, short-term tax incentive legislation entered into force in June 2019, which gives tax credits to enterprises that invest in artificial-intelligence machinery or 5G-related equipment, tech nology or services and meet relevant requirements, including the following:
• Tax credits cannot exceed 30% of a company’s tax liability for the year of the investment. Enterprises can choose between a one-time 5% reduction to their income tax for the year, or a three-year 3% tax cut.
• The expenditure must be at least TWD1 million and is capped at TWD1 billion in a tax year.
• The expenditure must be made between 1 January 2019 and 31 December 2021 (2022 for 5G).
In addition, on 25 November 2021, the Executive Yuan has issued a draft amendment to Article 10-1 of the SII to extend the date for investment in artificial-intelligence machinery or 5G to 31 December 2024 and to include the products or services of cyber security in the scope of the investment deduction. This draft amendment gives tax credits to enterprises that invest in the artificial-intelligence machinery or 5G-related equipment, tech nology or services or the products or services of cyber security and that meet relevant requirements, including the following:
• Tax credits cannot exceed 30% of a company’s tax liability for the year of the investment. Enterprises can choose between a one-time 5% reduction to their income tax for the year or a three-year 3% tax reduction.
• The expenditure must be at least TWD1 million and is capped at TWD1 billion in a tax year.
• The expenditure must be made between 1 January 2019 and 31 December 2024 (for the products or services of cyber secu rity, the period is from 1 January 2022 to 31 December 2024)
This draft amendment has not yet entered into force and is still waiting for a vote for passage by the Legislative Yuan.
Consequently, the effective date of this amendment is not yet clear.
On 2 November 2020, Taiwan’s Ministry of Economic Affairs and Ministry of Finance issued a new tax ruling (no.10904604900 and no.10904670180), which amends some articles of the regula tions governing the application of R&D tax credits for corporations and limited partnerships. The key aspects of the amendment are that the education and training expenses relating to the par ticipation of full-time R&D personnel in R&D activities qualify as R&D expenditure; consequently, income tax credits are appli cable. The regulation applies to income tax returns filed for the 2020 and subsequent tax years.
Capital gains. For profit-seeking enterprises, effective from 1 January 1990, income from securities transactions is not sub ject to regular income tax. Such income is subject to AMT. A securities transaction tax of 0.3% or 0.1% is imposed based on the transaction value.
During the period of 1 January 2010 through 31 December 2026, trading in corporate bonds and financial bonds (as defined in the Banking Law of Taiwan) is exempt from securities transaction tax. The suspension of income tax on securities transactions applies only to securities issued and certified in accordance with the law of Taiwan. Gains derived from disposals of securities that are not issued or certified in accordance with Taiwan regulations are subject to income tax.
Gains on sales of land are subject to land value increment tax (see Section D). Gains on sales of land had been exempt from income tax. However, on 9 April 2021, Legislative Yuan passed an amendment to the Income Tax Act with respect to the transfer of a house and land (House and Land Transactions Income Tax 2.0), which is effective from 1 July 2021. This amendment provides that the scope of taxation includes the sale of post 1 January, 2016 acquired land, buildings, pre-sold buildings and underlying land, or a majority (over 50% shareholding) shares of directly or indirectly held foreign or domestic profit-seeking enterprises of which more than 50% of value of shares or capital contribution is comprised of building and land in Taiwan (excluding sale of listed/over the counter or emerging stock). Under this House and Land Transactions Income Tax 2.0, the capital gains tax on the transfer of real property located in Taiwan is taxed at progressive rates subject to different holding periods. The following are the rates:
• Holding period up to two years: income tax rate of 45%
• Holding period of two years and up to five years: 35%
• Holding period of more than five years: 20% (same as current corporate income tax rate)
Administration. The tax year is normally the calendar year. Permission must be obtained to use any other period. An annual tax return must be filed during the fifth month of the year follow ing the tax year. An extension to file a tax return is not available.
In general, the late filing penalty is 10% of the tax due. It may not exceed TWD30,000 or be less than TWD1,500. A delinquent reporting surcharge is 20% of the tax assessed by the authorities.
It may not exceed TWD90,000 or be less than TWD4,500. A taxpayer that fails to pay the tax within the prescribed time limit is subject to a surcharge for delinquent payment and interest on a daily basis at the prevailing interest rate provided by the Directorate General of Postal Remittances and Savings Bank (PRSB). Underreporting of taxable income is subject to a penalty of up to two times the underpayment of tax. In the event of a failure to file the annual income tax return after expiration of the prescribed period, the tax authorities may make a provisional assessment of the amount of income and tax payable on the basis of available tax data or the profit standard of the same trade. In the event that other tax information is subsequently obtained by the tax authorities, the taxpayer is subject to a penalty of up to three times the tax shortfall, in addition to the delinquent report ing surcharge.
During the month of September, a profit-seeking enterprise (ex cluding a sole proprietor, partnership, prescribed small-size en terprise or tax-exempted entity) must pay an interim tax equal to 50% of the preceding year’s tax liability. Under the Income Tax Law, qualified enterprises may pay interim tax based on the income derived in the first six months of the current year. If the interim tax payment is made after 30 September but before 31 October, late payment interest accrues on a daily basis at the prevailing interest rate provided by the PRSB. If the interim pay ment is not made by 31 October, the tax authorities assess one month’s interest at the prevailing interest rate provided by the PRSB.
Dividends. The dividend withholding tax rate is 21% (increased from 20%) starting from 1 January 2018. for nonresident corpo rations or nonresident individuals, regardless of whether the investments are approved by the Taiwan government pursuant to the Statute for Investment by Foreign Nationals or the Statute for Investment by Overseas Chinese. Withholding tax is not imposed on dividends paid to residents.
A surtax is imposed on the undistributed profits of companies in the second year following the year in which the profits are earned. The surtax rate is 5% (reduced from 10%), effective for tax years starting on or after 1 January 2018. This tax is in addition to the corporate income tax imposed on the profits. Resident individuals can include the dividends received from Taiwan corporations in their individual income tax return as taxable income, subject to a tax-exempt amount of 8.5% of dividend income (capped at TWD80,000) or have dividends taxed separately at a flat rate of 28%.
Dividends received by resident companies from other resident companies are exempt from corporate income tax.
Foreign tax relief. A tax credit is allowed for foreign income tax paid directly by a domestic profit-seeking enterprise, but it may not exceed the additional amount of the Taiwan tax resulting from the inclusion of the foreign-source portion in the profit-seeking enterprise’s total income.
C. Determination of trading income
General. Income for tax purposes is computed according to Taiwan’s generally accepted accounting principles, adjusted for certain provisions included in the tax code.
Necessary and ordinary expenses of a profit-seeking enterprise are deductible, provided these are adequately supported by documentation. The guidelines of Examination of Income Tax of ProfitSeeking Enterprises, promulgated by the Ministry of Finance, provide guidance for determining deductible business expenses. Transactions must conform to regular business practice; other wise, tax authorities may assess tax based on standard profit margins derived from industry statistics.
If the income of a company consists of both taxable income and exempt income, the costs, expenses or losses, except for those that are attributable to the taxable income and exempt income in a direct, reasonable and definite way, must be allocated to taxable income and exempt income based on certain permitted methods.
Tax exemptions. A foreign enterprise engaging in international transportation that derives income in Taiwan is exempt from tax if Taiwan and the home jurisdiction of the foreign enterprise have entered into an international transportation income tax agreement, which provides reciprocal treatment to Taiwan international trans portation enterprises operating in the foreign jurisdiction.
Gains on sales of land had been exempt from income tax. However, see Capital gains in Section B for the Taiwan tax implications if the transaction of a house and land meets the criteria of the House and Land Transactions Income Tax 2.0.
On approval from the competent authority, royalties paid to a foreign enterprise for the use of its patent rights or trademarks, or for the licensing of other special rights, may be exempt from tax if the licensed rights are used to introduce new production tech nology or products, improve product quality or reduce production cost. In addition, service fees received by foreign enterprises for rendering technical services in the construction of a factory for certain strategically important enterprises (SIEs) and royalties for the licensing of patents to SIEs may also be exempt from tax on approval.
A foreign-based corporate taxpayer that is engaged in interna tional transportation, construction contracting, technical service provision, or machinery and equipment leasing may apply to use a deemed-profit-rate method (15% in general, and 10% for inter national transportation business) in determining its taxable income in Taiwan if it is difficult to calculate the costs and expenses arising from the conduct of the business in Taiwan.
Interest received by a foreign financial institution for offering financing facilities to its Taiwan branch offices or other financial institutions in Taiwan is exempt from tax. With the approval of the Ministry of Finance, interest received by a foreign financial insti tution for extending loans to legal entities in Taiwan for financing important economic construction projects is also exempt from tax.
Inventories. Inventories are valued for tax purposes at the lower of cost or net realizable value. In determining the cost of goods
sold, specific identification, first-in, first-out (FIFO), weighted average, moving average, or any other method prescribed by the competent authority may be used. However, the use of two differ ent cost methods in one fiscal year is not allowed.
Provisions. Provisions for a retirement fund approved by the authorities are deductible in amounts up to 15% of the total payroll. The applicable percentage depends on whether the fund is managed separately from the business entity and whether it con forms to the provisions of the Labor Standards Law.
Allowance for bad debts is limited to 1% of the balance of outstand ing trade accounts and notes receivable (secured or unsecured) at year-end.
Tax depreciation, depletion and amortization. A taxpayer may claim a depreciation deduction for most property (except land) used in a trade or business. Depreciation may be computed using the straight-line, fixed percentage on diminishing book value method, working-hour method, sum-of-the-years’-digits method or production-unit method. Under the working-hour method, depreciation is computed based on the number of working hours that a depreciable asset is used in a tax year. The time periods over which an asset may be depreciated are specified by the tax authorities. The following are some of the applicable time periods.
Assets Years
Commercial buildings 10 to 50 Industrial buildings 5 to 35 Office equipment 3 to 5 Motor vehicles and vessels 3 to 18 Plant and machinery 2 to 20
Companies may use the accelerated depreciation method if they meet certain criteria.
Depletion of assets in the form of irreplaceable resources can be computed either based on the production units or methods provided by the Table of Depletion Assets promulgated by the Ministry of Finance. This method must be applied consistently from year to year. In addition, a taxpayer may claim an amortization deduction for intangibles and organizational expenses. Business rights (for example, commercial rights for operating public utility, telephone, public transportation, shipping and air transportation businesses) and copyrights are amortized over 10 years and 15 years, respectively. Trademarks, patents and franchises must be amortized over the period prescribed by the respective laws governing the granting of these rights. Organizational and preoperating expenditures incurred during the period from the planning phase to the first year in which significant revenue is generated from the main business activities must be expensed on occurrence.
Relief for losses. If certain requirements are met, companies may carry forward for up to 10 years losses that have been approved by the tax authorities and not yet expired. Loss carrybacks are not permitted.
Groups of companies. In general, associated or related companies in a group are taxed separately for corporate income tax purposes and may not file consolidated tax returns. However, a financial holding company that holds 90% or more of the shares of subsidiaries in Taiwan for at least 12 months may elect to file a consolidated profit-seeking enterprise income tax return under its own name.
In addition, a company that acquires 90% or more of the shares or capital of its subsidiaries through a merger, spin-off or other acquisition under the Business Merger and Acquisition Law and holds such shares for at least 12 months may elect to file a con solidated profit-seeking enterprise income tax return under its own name.
A 5% surtax on the undistributed consolidated retained earnings applies in addition to the corporate income tax on consolidated net income.
An election to file a consolidated profit-seeking enterprise return applies only to corporate income tax and, as a result, qualifying parent companies and their subsidiaries must calculate all other taxes separately.
D. Other significant taxes
The following table summarizes other significant taxes.
Nature of tax Rate (%)
Value-added tax, on sales and services 5 Business tax for financial industry 1/2/5 Land value increment tax, on unearned increase in the value of land, payable by the seller at the time of ownership transfer 20 to 40 Registration fee, on original or additional capital contributions 0.025
E. Miscellaneous matters
Foreign-exchange controls. Under foreign-exchange control regu lations, registered business entities or adults legally residing in Taiwan may remit out (in) unlimited funds for the import (export) of goods and services. However, prior declaration to the Taiwan Central Bank is required for the following:
• An individual who has accumulated inward or outward remit tances exceeding USD5 million in a year
• A business entity with accumulated inward or outward remit tances exceeding USD50 million in a year
• A single remittance by an individual exceeding USD500,000
• A single remittance by a business entity exceeding USD1 million
In addition, supporting documents, such as transaction contracts, must be submitted at the time of remittance for the Central Bank’s audit purposes.
Debt-to-equity rules. On 26 January 2011, the President of Taiwan announced the thin-capitalization rule enacted into Article 43-2 of the Income Tax Act. On 22 June 2011, the Ministry of Finance announced the enforcement rules for the thin-capitalization rule. The enforcement rules contain a debt-to-equity ratio of 3:1
(excluding companies in the financial industries). Interest on the excess portion of loans is not deductible. The enforcement rules do not apply to enterprises satisfying any of the following conditions:
• Total net current annual operating income and non-operating income is less than TWD30 million.
• Total annual interest expenses and total interest expenses derived from intercompany loans in the current year are both less than TWD4 million.
• Before including the interest expenses in the taxable income calculation, the current year’s taxable income is negative and such tax losses are not eligible for the tax loss carryforward re gime under Article 39 of the Income Tax Act.
Controlled foreign companies. Taiwan introduced an act contain ing a controlled foreign company (CFC) regime in July 2016. Under the act, a nonresident company is considered a CFC if it is 50% or more directly or indirectly owned by a Taiwan resident company or individual. A resident company that holds an interest of 50% or more in a CFC is taxed on the company’s share of the profits of the CFC, regardless of whether a dividend has been received by the Taiwanese company. However, this act has not yet entered into force. The Executive Yuan will decide the effective date of the act.
Anti-avoidance legislation. The Taiwan tax laws contain rules that deal with tax evasion and tax avoidance. The general rule is that the tax authorities may ignore transactions that constitute an abuse of the law and assess taxes with respect to each transacting party based on the economic substance of the transactions as well as on the attribution of the economic benefits. The same rule applies to sham transactions designed to conceal the economic reality of the transaction.
Transfer pricing. The Taiwan Transfer Pricing Examination Guidelines (the TP Guidelines) took effect on 30 December 2004. Except for immaterial amounts from related-party transactions, extensive contemporaneous documentation is required. Under the TP Guidelines, on filing the annual income tax return, a profitseeking enterprise must have the transfer-pricing report and rel evant documents prepared. In addition, in the event of a tax audit, a profit-seeking enterprise must provide the tax authorities with all required documents within one month of a request for such documents. The TP Guidelines provide that the tax authorities may impose a maximum penalty of 200% of the tax shortfall resulting from improper transfer prices. In addition, amendments made to the TP Guidelines in November 2017 adopt the threetier, transfer-pricing documentation requirement including Master File, Country-by-Country Report (CbCR) and Local File, in line with Action 13 of the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) Project. The amendments apply to the profitseeking enterprises’ income tax returns starting with the 2017 tax year.
However, a Taiwan profit-seeking enterprise that is an affiliate of a multinational enterprise (MNE) group can be exempt from submission of the Master File if the sum of the net operating revenue and non-operating revenue in the current year is less than
TWD3 billion or if the aggregate amount of cross-border con trolled transactions in the current year is less than TWD1.5 billion.
A Taiwan profit-seeking enterprise that is an affiliate of an MNE group can be exempt from submission of the CbCR if the follow ing criteria are met:
• The Taiwan profit-seeking enterprise is the Ultimate Parent Entity (UPE) of an MNE group, and the total consolidated revenue of the group in the preceding year was less than TWD27 billion.
• The UPE of the MNE group is not within the jurisdiction of Taiwan and one of the following conditions applies:
The jurisdiction in which the UPE is a tax resident has established the CbCR requirement, and the MNE group meets the safe harbor rules of the jurisdiction.
The jurisdiction in which the UPE is a tax resident has not established the CbCR Requirement, and the Surrogate Parent Entity (SPE) meets the safe harbor rules of the juris diction in which the SPE is a tax resident.
The jurisdiction in which the UPE is a tax resident has not established the CbCR requirement, there is no SPE, and the Taiwan safe harbor rules are met.
It satisfies for the condition of the safe harbor of the Master File, namely the sum of its net operating revenue and non operating revenue in the current year is less than TWD3 billion or the aggregate amount of its cross-border controlled transactions in the current year is less than TWD1.5 billion.
Even if the safe harbor rules are met, the Taiwan profit-seeking enterprise is still required to submit the Master File or CbCR to the tax authority on request for audit if the MNE group is obligated to submit these documents based on the request of the other tax jurisdiction.
On 15 November 2019, the Taiwan Ministry of Finance issued a new tax ruling that provides guidelines for making a one-off transfer-pricing adjustment. Because foreign related-party trans actions of profit-seeking enterprises with an overseas parent are often not carried out at the expected terms of the group’s transferpricing policy, there has been a need for one-off transfer-pricing adjustments. From the 2020 fiscal year, profit-seeking enter prises can conduct one-off transfer-pricing adjustments if they are carried out prior to the end of the year and meet the relevant required criteria. As outlined in the regulation, the relevant duties and taxes (for example, customs duty, value-added tax, commod ity tax and withholding tax) are paid or refunded based on the adjusted transfer price.
F. Treaty withholding tax rates
Taiwan has entered into double tax treaties with the jurisdictions listed in the table below.
Taiwan has entered into international transportation income tax agreements with Canada, the European Union, Germany, Japan, Korea (South), Luxembourg, Macau, the Netherlands, Norway, Sweden, Thailand and the United States.
The following table lists the withholding tax rates under Taiwan’s double tax treaties. The rates apply only if the recipient is the beneficial owner of the income.
Dividends Interest Royalties
% % %
Australia 10/15 (a) 10 12.5
Austria 10 10 10
Belgium 10 10 10
Canada 10/15 (e) 10 10
China Mainland (t) 5/10 (p) 7 7
Czech Republic (o) 10 10 5/10 (n)
Denmark 10 10 10
Eswatini 10 10 10
France 10 10 10
Gambia 10 10 10 Germany 10/15 (q) 10/15 (h) 10
Hungary 10 10 10 India 12.5 10 10
Indonesia 10 10 10
Israel 10 7/10 (i) 10
Italy 10 10 10 Japan 10 10 10
Kiribati 10 10 10 Luxembourg 10/15 (b) 10/15 (j) 10 Malaysia 12.5 10 10 Netherlands 10 10 10 New Zealand 15 10 10 North Macedonia 10 10 10 Paraguay 5 10 10
Poland 10 10 3/10 (r)
Saudi Arabia 12.5 10 4/10 (s)
Senegal 10 15 12.5 Singapore (c) (k) 15 Slovak Republic 10 10 5/10 (n)
South Africa 5/15 (d) 10 10 Sweden 10 10 10 Switzerland 10/15 (e) 10 10 Thailand 5/10 (f) 10/15 (l) 10
United Kingdom 10 10 10
Vietnam 15 10 15 Non-treaty jurisdictions 21 (g) 15/20 (m) 20
(a) The 10% rate applies to dividends paid to a company (other than a partner ship) holding directly at least 25% of the capital of the payer. The 15% rate applies in all other cases.
(b) The 15% rate applies if the beneficial owner of the dividends is a collectiveinvestment vehicle established in Luxembourg and treated as a body corpo rate for tax purposes in Luxembourg. The 10% rate applies in all other cases.
(c) For dividends paid to Singapore residents, the withholding tax on the divi dends and the corporate income tax payable on the profits of the payer may not exceed 40% of the taxable income of the payer out of which the dividends are paid.
(d) The 5% rate applies if the beneficial owner of the dividends holds directly at least 10% of the capital of the payer. The 15% rate applies in all other cases.
(e) The 10% rate applies to dividends paid to a company (other than a partner ship) holding directly at least 20% of the capital of the payer. The 15% rate applies to other dividends.
(f) The 5% rate applies if the beneficial owner of the dividends holds at least 25% of the capital of the payer. The 10% applies in all other cases.
(g) The 21% rate applies to dividends paid to nonresident corporations and non resident individuals, effective from 1 January 2018 (see Section B).
(h) The 15% rate applies to interest on real estate investment trusts and real estate asset trusts. The 10% rate applies in all other cases.
(i) The 7% rate applies to interest on bank loans. The 10% rate applies in all other cases.
(j) The 15% rate applies if the beneficial owner of the interest is a collectiveinvestment vehicle established in Luxembourg and treated as a body corpo rate for tax purposes in Luxembourg. The 10% rate applies in all other cases.
(k) The Singapore treaty does not provide a preferential withholding tax rate for interest payments.
(l) The 10% rate applies to interest received by financial institutions (including insurance companies). The 15% rate applies in all other cases.
(m) The 15% rate applies to interest on financial instruments (see Section A).
(n) The 5% rate applies to the royalties paid for the use of, or the right to use, industrial, commercial or scientific equipment. The 10% rate applies in all other cases.
(o) The tax treaty entered into force on 12 May 2020 and is effective from 1 January 2021.
(p) The 5% rate applies to dividends paid to a company (other than a partnership) holding directly at least 25% of the capital of the payer. The 10% rate applies in all other cases.
(q) The 15% rate applies to dividends distributed by a German real estate invest ment company that is tax-exempt regarding all or part of its profits or that can deduct the distributions in determining its profits. The 10% rate applies in all other cases.
(r) The 3% rate applies to royalties paid for the use of, or the right to use, indus trial, commercial or scientific equipment. The 10% rate applies in all other cases.
(s) The 4% rate applies to royalties paid for the use of, or the right to use, indus trial, commercial or scientific equipment. The 10% rate applies in all other cases.
(t) This treaty is not yet effective.
On 17 November 2021, Taiwan and Korea (South) signed an agreement on the avoidance of double taxation and income tax evasion. The tax treaty is not yet effective, and the applicable withholding tax rates will be announced after the agreed imple mentation date of the tax treaty.