Taiwan’s Ministry of Finance clarifies that foreign taxpayers can now apply for income tax treaty benefits up to ten years from tax payment, subject to treaty-specific rules.
Taiwan’s Ministry of Finance has released a statement providing clarification on the extended domestic deadline for submitting applications under a tax treaty.
The National Taxation Bureau of the Northern Area (NTBNA), MOF, stated that, the Ministry of Finance revised and issued Article 34 of Regulations Governing Application of Agreements for the Avoidance of Double Taxation with Respect to Taxes on Income （hereinafter referred to as “Regulations Governing Application”）, which stipulates that from 10 April 2025, the period for residents of other contracting states (foreign taxpayers) to apply to Taiwan’s tax collection authorities for the application of income tax treaties has been extended from 5 years from the date of tax payment to 10 years.
The Bureau further stated that according to the revised provisions, the period for foreign taxpayers to apply for the application of the agreement to our country has been relaxed to “no later than 10 years from the date of tax payment,” and the application principle of the transition period resulting from the amendment of the provision has been added. If the foreign taxpayer’s application case has exceeded more than 5 years from the date of tax payment to the date of implementation of the amended provision（i.e. 10 April 2025), the revised provisions will not apply.
For example, Company A in Taiwan pays labour fees to Company B abroad and pays withholding tax on April 15, 2020. According to the regulations before the amendment, Company B had a 5-year period to apply for a tax refund, with the last application date being 14 April 2025. Since it has not been more than 5 years by the time the amendment was implemented (10 April 2025), the application period could be relaxed to 10 years.
The Bureau would like to especially remind taxpayers that, in accordance with Article 34 of the revised Regulations Governing Application, in addition to relaxing the application period of the income tax agreements to 10 years and the principle of application during the transition period, if there are other provisions in the special income tax agreement, the agreement should be given priority.
For example, Paragraph 2, Article 26 of the tax agreement signed between Taiwan and Germany states that “applications for tax refunds must be submitted before the end of the fourth year after the calendar year in which the dividends, interest, royalties or other income items are subject to withholding tax.” Accordingly, German residents should submit applications for the application of the income tax agreement before the fourth year after the calendar year, and the 10-year provision after the amendment does not apply.
