Taiwan

Resident corporations paying service fees to foreign entities are often subject to 20% WHT. However, under the following scenarios, the WHT might be reduced:

• WHT on service income may be reduced by deducting costs and expenses and applying a contribution ratio.
• Technical services income can utilise a deemed profit rate of 15%, thereby reducing the net WHT rate to 3%.
• Cross-border electronic services income may be taxed after deducting costs and expenses and applying a contribution ratio.
• A foreign entity that is a tax resident of a country with a tax treaty with Taiwan can evaluate the nature of its income to determine whether the income qualifies for business profits tax exemption in accordance with the applicable tax treaty.

In addition to the above, resident corporations paying certain types of income are required to withhold tax as follows:

Notes

1. The 15% rate applies to interests paid to a non-resident on bonds, short-term bills, certificates, and interests derived from repurchase transactions for these bonds or certificates. The rate in all other cases is 20%.

2. Royalties paid to a foreign enterprise for the use of certain IP rights may be exempt from WHT if approved in advance by the competent authority. The rate in all other cases is 20%.

3. The 10% rate applies where dividends are paid to a company (other than a partnership) directly holding at least 25% of the capital of the company paying the dividends. The 15% rate applies to dividends paid in all other cases.

4. The 0% rate applies to interests paid on loans granted, guaranteed, or insured by an approved financial institution of the other territory for the purpose of promoting exports and on all loans between banks; otherwise, the rate is 10%.

5. The rate on dividends is 10%, except in the case of certain real estate investment companies, which are subject to a 15% rate.

6. The 0% rate applies to interests paid to public institutions of the other territory. The 15% rate applies to interests received by a real estate investment trust or a real estate asset trust. The 10% rate applies in all other cases.

7. The 7% rate applies to interests paid on bank loans; otherwise, the rate is 10%.

8. The 15% rate applies to dividends where the recipient is a collective investment vehicle in the other territory and treated as a body corporate in that other territory; otherwise, the rate is 10%.

9. The 0% rate applies to interests on loans between banks; a 15% rate applies where the recipient is a collective investment vehicle in the other territory and treated as a body corporate in the other territory. The 10% rate applies in all other cases.

10. The WHT rate on dividends paid to the recipient and the CIT payable on the profits of the investee company may not exceed 40% of the taxable income out of which the dividends are declared.

11. The 5% rate applies to usage of, or certain right to use, industrial, commercial, or scientific equipment; otherwise, the rate is 10%.

12. The 5% rate applies where dividends are paid to a company directly holding at least 10% of the capital of the company paying the dividends; otherwise, the rate is 15%.

13. The 10% rate applies where dividends are paid to a company (other than a partnership) directly holding at least 20% of the capital of the company paying the dividends; otherwise, the rate is 15%.

14. The 5% rate applies where dividends are paid to a company directly holding at least 25% of the capital of the company paying the dividends; otherwise, the rate is 10%.

15. The 0% rate applies to interests paid to the government or the central bank of the other territory. The 10% rate applies to interests received by a financial institution (including an insurance company). The 15% rate applies in all other cases.

16. The 10% rate applies where dividends are paid to a company directly or indirectly holding at least 20% of the capital of the company paying the dividends. The 15% rate applies to dividends paid in all other cases.

17. The 10% rate applies to all types of interests; however, tax exemption applies to certain interests paid to public institutions of the other territory or paid in respect of a loan made, guaranteed, or insured by certain institutions.

18. The 10% rate applies to all types of interests; however, tax exemption applies to certain interests paid to public institutions of the other territory or paid with respect to debt-claims guaranteed, insured, or indirectly financed by government institutions.

19. The 10% rate applies to all types of interests; however, tax exemption applies to certain interests paid to public institutions of the other territory or paid in respect of a loan granted, guaranteed, or insured by certain institutions.

20. The 3% rate applies to royalties paid as a consideration for the use of industrial, commercial, or scientific equipment; otherwise, the rate is 10%.

21. The 4% rate applies to royalties paid as a consideration for the use of industrial, commercial, or scientific equipment; otherwise, the rate is 10%.

Tax treaties

Comprehensive Income Tax Agreements, which cover all income flows, are entered into with the following territories:

• Asia: India, Indonesia, Israel, Japan, Malaysia, Saudi Arabia, Singapore, South Korea, Thailand, and Vietnam.
• Oceania: Australia, Kiribati, and New Zealand.
• Europe: Austria, Belgium, Czech Republic, Denmark, France (French text), Germany, Hungary, Italy, Luxembourg, the Netherlands, North Macedonia, Poland, Slovakia, Sweden, Switzerland, and the United Kingdom.
• Africa: Eswatini, Gambia, Senegal, and South Africa.
• Americas: Canada and Paraguay.

International Transportation Income Tax Agreements are entered into with the following territories:

• Asia: Japan, Korea, Macau, and Thailand.
• Europe: the European Union, Germany, Luxembourg, the Netherlands (Shipping, Air Transport), Norway, and Sweden.
• Americas: Canada and the United States.