The Taipei National Taxation Bureau has clarified that dividends distributed by foreign companies whose shares are approved for listing and trading in Taiwan are not exempt under Article 42 of the Income Tax Act and must be included in taxable income for enterprises headquartered domestically, while overseas enterprises remain untaxed on such dividends.
Taiwan’s Taipei National Taxation Bureau of the Ministry of Finance stated that profit‑seeking enterprises headquartered domestically which invest in shares of foreign companies, issued under foreign law and approved by the securities authority for listing and trading, must include the dividends received in their taxable business income in accordance with Article 3, Paragraph 2 of the Income Tax Act.
This announcement was made on 12 February 2026.
The Bureau further explained that a foreign company established and registered under foreign law, which issues shares under foreign law and is approved for listing and trading in Taiwan, distributes dividends that are not considered income sourced from the Republic of China (Taiwan).
Therefore, profit-seeking enterprises with head offices outside Taiwan are not subject to Taiwan’s corporate income tax on such dividends. However, for profit-seeking enterprises with head offices in Taiwan, whether the dividends are paid in cash or in stock, they must be included in taxable business income under Article 3, Paragraph 2 of the Income Tax Act. This is because the issuing company is a foreign entity, and such dividends do not qualify for the exemption under Article 42 of the Income Tax Act, which applies only to dividends received from investments in other domestic profit-seeking enterprises.
By way of example, Company A, with its head office in Taiwan, invested in shares of Foreign Company A, issued under foreign law and listed for trading in Taiwan’s securities market. In fiscal year 2023, Company A received TWD 400,000 in cash dividends from Foreign Company A. However, when filing its 2023 corporate income tax return, Company A mistakenly treated the dividends as exempt under Article 42 of the Income Tax Act and failed to report them. The Bureau subsequently assessed an additional tax of TWD 80,000 and imposed a fine.
The Bureau urges domestic profit-seeking enterprises that have received dividends from foreign companies whose shares are approved for listing and trading in Taiwan to promptly file supplementary declarations and pay any omitted taxes with their local tax bureau, branch office, collection office, or service center. If they do so voluntarily before being reported or investigated by tax authorities or designated investigators of the Ministry of Finance, they may, under Article 48-1 of the Tax Collection Act, pay the tax with interest but without penalty.
