Taiwan’s legislative Yuan approved the third income tax optimization plan regarding changes for both corporate and individual taxpayers on 18 January 2018.
Corporate taxation:
The corporate tax rate is raised from 17% to 20% in 2018;
Where a small company’s taxable income is less than TWD 500,000, the income tax rate shall increase gradually by 1% per year from 2018 onwards. Therefore, 18% in 2018, 19% in 2019 and 20% in 2020.
The withholding dividend rate for foreign shareholder is modestly increased from 20% to 21%.
The retained earnings (profit and loss of unallocated surplus) tax is reduced from 10% to 5%, modestly reducing the corporate income tax burden of accumulating self-sustaining capital by retaining surplus and assisting in the accumulation of hard-to-come small and medium-sized start-ups in the future.
Individual taxation:
Individual dividends tax is subject to the following two options:
Dividends are consolidated into taxable aggregate income, and taxable amount is calculated at 8.5% of the dividend income amount per household (deduction capped at TWD 80,000).
Dividends are calculated separately at the tax rate of 28% and consolidated with the tax payable of other categories of income.
