All sales of goods and services in Taiwan, as well as the importation of goods into Taiwan, are subject to business tax. There are two types of business tax systems: value-added tax (VAT) and gross business receipts tax (GBRT).
Sellers and service providers are generally obligated to pay business tax for the sales of goods or services within Taiwan unless the law provides otherwise. For importation of goods, the business tax will be paid by the goods receivers or buyers via customs. For importation of services sold by foreign companies to Taiwanese buyers, business tax shall be paid by the service buyers. However, the service buyer (corporate entity) will not be required to pay business tax if it is exclusively engaged in taxable transactions subject to either 5% or 0% VAT.
Despite the above, Taiwan has formally implemented a new VAT mechanism starting 1 May 2017 for cross-border sales of business-to-consumer (B2C) electronic services. Under the new mechanism, sales of cross-border electronic services by corporate sellers to individual buyers require the foreign companies to register for VAT purposes in Taiwan, file VAT returns, and pay VAT if their annual sales exceed the promulgated threshold of TWD 480,000.
Value-added tax (VAT)
VAT is applicable to general industries, and the VAT rate is 5%. Under the VAT system, each seller collects output VAT from the buyer at the time of sale, deducts input VAT paid on purchases from output VAT, and remits the balance to the tax authority.
Gross business receipts tax (GBRT)
GBRT is applicable to specified industries (e.g. financial institutions, small businesses). For investment trust companies, securities and futures firms, short-term commercial paper enterprises, and pawnshops, the rate is 2%. The GBRT rate on revenues derived from the core business operations of banks and insurance enterprises is 5%. For re-insurance enterprises, the rate is 1%.
Taiwan uses the Customs Cooperation Council Nomenclature (CCCN) to classify goods and set duty rates. The customs duty is payable by the consignee or the holder of the bill of lading for imported goods, and is based on the dutiable value or the volume of goods imported.
Commodity tax (excise duty) is levied on certain commodities, as specified in the Commodity Tax Act (including rubber tyres, beverages, cement, plate glass, oil and gas, electrical appliances, and vehicles), at the time when such goods are dispatched from a factory or when imported. Tax rates vary from 8% to 30% and are applicable to different types of commodities based on the value of the goods or its volume in specific circumstances.
|Type of commodity
||10% or 15%
||8% or 15%
||TWD 280 to TWD 600 per ton
|Oil and gas
||TWD 110 to TWD 6,830 per kilolitre or TWD 690 per ton
||10% to 20%
||15% to 30%
Land and buildings are annually assessed for tax based on their officially assessed values as determined by the government authorities at the applicable rate. The land value tax rate ranges from 1% to 5.5% of the assessed land value. The building tax rate for commercial properties is 3% to 5% of the assessed value, and the rate for non-commercial properties is 1.2% to 3.6% of the assessed value.
Land value increment tax (LVIT)
The sale of land is currently subject to LVIT and payable by the seller. The tax is levied on the increase in the government-assessed value of the land during the ownership period, adjusted for inflation, at regular progressive rates ranging from 20% to 40%, or a special rate of 10%.
Real property transfer tax
The new real property transfer tax regime is applicable to all properties acquired on or after 1 January 2016, as well as those bought on or after 2 January 2014 if held for less than two years. The taxable base is the market value of the properties reduced by related costs, expenses, and the increase in government-assessed land value for LVIT purposes. A rate of 17% will apply on Taiwanese corporate taxpayers; whereas, a tax rate of 35% or 45% will apply on profit-seeking enterprises with foreign head offices located outside of Taiwan (i.e. Taiwan branch), depending on whether the property is held for more than or less than one year.
LVIT will remain unchanged by the implementation of the new real property transfer tax regime on property transactions. The total amount of land value increment is deducted from real estate transaction income to avoid double taxation. The old property tax regime still applies to properties purchased prior to 2 January 2014, or those bought on or after 2 January 2014 if held for more than two years, where only gain from sale of buildings is subject to CIT assessment, while gain from sale of land is exempt from CIT assessment, and LVIT applies to increment in government-assessed value of land instead.
Currently, transactions of immovable property involving sale, creation of Dien, exchange, bestowal, partition, or acquisition of ownership by virtue of possession are subject to deed tax. The deed tax rates range from 2% to 6%, depending on the types of transactions involved.
Stamp taxes are imposed on each copy of the following documents executed within the territory of Taiwan (with the following respective tax rates):
- Monetary receipts must have a revenue stamp of 0.4% of the amount received per piece. However, a receipt for the money deposited by the bidder requires a revenue stamp of 0.1% of the amount received per piece.
- Contract or deed for the sale or purchase of movable property must have a revenue stamp of TWD 12 per piece.
- Contractual agreement under which one party agrees to complete a specific piece of work for the other party for consideration must have a revenue stamp of 0.1% of the contract price.
- Contract for the sale, transfer, and partition of real estate must have a revenue stamp of 0.1% of the contract price.
Securities transaction tax
Tax is levied on securities transactions at the rate of 0.3% on gross proceeds from the sale of domestic shares. Trading in corporate bonds and financial bonds issued by Taiwan companies is temporarily exempt from securities transaction tax assessment.
A 10% luxury tax applies to the sale of passenger cars, private jets, and helicopters valued at TWD 3 million or more, as well as to the sale of yachts that are at least 30.48 metres (100 feet) long. Preserved wildlife products (including turtle shells, hawksbill, coral, ivory, furs, and their products), high-end furniture, and non-refundable memberships worth TWD 500,000 or more are also taxed at 10%.
As of 1 January 2016, luxury tax is no longer levied on sales of real estate properties.
There are no payroll taxes other than those for social security contributions (see below).
Social security contributions
There are compulsory social security programs that require contributions from employers and employees based on monthly insured salary, which is capped at various amounts for labour insurance, health insurance, and pensions. Taiwan social security programs include the following:
- Labour Insurance Program: Where a company hires five or more employees, it is obligated to insure all employees (including domestic and foreign employees) under the labour insurance program run by the government. Companies with less than five employees may also apply for labour insurance coverage for their employees. The premium rate for ordinary insurance is 10% on the employee's monthly insured salary up to TWD 45,800, with an additional 1% levied for unemployment insurance. The employer is required to contribute 70% of this premium.
- National Health Insurance Program: The premium rate for each insured person is set at 4.69% of a domestic/foreign employee's monthly insured salary, up to TWD 182,000. The employer is required to contribute 60% of this premium. Further, the employer bears the cost of both the employee itself and that of the average dependant, which amounts to 1.61 headcount per employee. Moreover, under the Second Generation National Health Insurance Program, the employer needs to bear a supplementary premium (at the rate of 1.91%) where the monthly pay (including both regular and non-regular pay) exceeds the monthly insured salary range, which is capped at TWD 182,000 for any individual.
- Labour Pension Program: An employer needs to make monthly contributions to a domestic employee's individual pension account set up with the Labour Insurance Bureau. The monthly contribution rate borne by the employer should be at least 6% of the employee's monthly insured salary up to TWD 150,000.