Taiwan’s Ministry of Finance has issued a notice mandating the submission of Non-Withholding Tax Statements for payments that are exempt from withholding on 4 November 2024.

The tax withholding system aims to supervise and urge tax withholders to fulfil their duty to act, including withholding/paying tax payables, as well as filing withholding tax statements, to facilitate the National Taxation Bureau’s management of taxation data. Articles 111, 111-1, and 114 of the Income Tax Act therefore specify that those who violate tax withholding obligations should be subject to penalties.

The National Taxation Bureau of Kaohsiung, Ministry of Finance, stated that, for a payment made in each year by an organisation, institution, school, enterprise, bankruptcy estate, or practitioner of profession of any income which is subject to tax withholding, and a payment of any other income as prescribed under Category 10 of Paragraph 1 of Article 14 of the Income Tax Act, if tax is not withheld because the amount paid does not reach the minimum amount of income subject to tax withholding（tax will be exempted if the tax payable is below TWD 20,000 each time or if the payment does not come under the categories subject to tax withholding, a list of recipients of such payments shall be prepared in accordance with the prescribed form and submitted to the National Taxation Bureau by the end of January of each year.

In the case that three national holidays occur in immediate succession in January, the period for the submission of the non-withholding tax statements shall be extended to 5 February. If the tax withholding unit violates Paragraph 3 of Article 89 of the Income Tax Act by failing to file the non-withholding tax statements on time or by not reporting them truthfully, a fine of TWD 1,500 will be imposed on the tax withholder as prescribed in Article 111 of the same Act and the tax withholder will also be notified to file the statements within a prescribed period. If the tax withholder fails to do so again, penalties will be imposed accordingly by law.

The Bureau further stated that this kind of case often occurs and provides the following example: Mr. Wang, who is a business owner, made a payment of TWD 12,000 for rental income, which is below the tax withholding threshold, in 2023 and thought that the exemption from withholding tax removed the obligation to submit the non-withholding tax statements. Although Mr. Wang proactively submitted the 2023 non-withholding tax statements in May 2024, he was fined TWD 1,500 because the submission was made after the deadline. However, since the submission occurred before the competent taxation authority discovered it, the standards for reducing and exempting penalties for tax violations were applicable, and the fine imposed on Mr. Wang was halved to TWD 750.

The Bureau advises all tax withholders that, if they discover any instances of non-compliance with filing requirements, they should voluntarily submit the statements at the nearest branch or office under the National Taxation Bureau to take advantage of applicable penalty reduction provisions.