To optimise Taiwan’s income tax withholding system and protect the rights and interests of taxpayers, amendments to the Income Tax Act, announced on 7 August 2024, will be promulgated on 1 January 2025, as approved by the Executive Yuan.

The announcement was made by Taiwan’s Ministry of Finance.

The National Taxation Bureau of Kaohsiung, Ministry of Finance, has highlighted three aspects of this optimisation of the income tax withholding system as follows:

1. Amendments to the scope of tax withholders, specifying that the person-in-charge of the company or the head of the tax withholding unit in an agency, organisation, or school will be changed from a natural person to the company, agency, organisation, or school itself, ensuring consistency between responsibility and duty.

2. Deadlines for the payment of tax withheld from non-residents, as well as for filing, issuing, and submitting withholding tax statements, have been added in accordance with resident-related provisions for extending the declaration period when the submission period coincides with consecutive national holidays. Specifically, the deadline may be extended by five days if the submission period overlaps with three consecutive national holidays. This measure helps alleviate tax withholders’ burdens when they encounter consecutive holidays.

3. Amendments to the penalties for failure to file, issue, and submit withholding tax statements in accordance with the law. Specifically, the tax authority may assess the severity of each violation and the degree of culpability within a prescribed range of penalties; and is granted discretion in imposing appropriate sanctions to ensure fairness and justice.

The Bureau reminds tax withholders that these amendments to the Income Tax Act will be promulgated on 1 January 2025. Therefore, the provisions prior to the amendments will still apply to the payment of 2024 income tax when filing withholding tax statements in 2025.

The Bureau provides the following examples:

1. When Company A files withholding tax statements for various types of income paid in 2024 in 2025, the pre-amendment provisions will still apply. The person-in-charge of Company A will remain responsible for the withholding obligations on the statements and tax returns. However, for any income paid by Company A after 1 January 2025, the post-amendment provisions will apply, and the withholding obligation will shift to the business itself （i.e., Company A）.

2. Regarding the year-end bonus paid by Company A to non-residents and its tax withheld on 22 January 2025, the deadline for tax payment, as well as for filing, issuing, and submitting the tax withholding statements, is 31January 2025 （within 10 days from the date of withholding）.

However, since the period from 28 to 31 January 2025, coincides with the Lunar New Year holiday and overlaps with more than three consecutive national holidays, the deadline may be extended by five days to 5 February 2025, in accordance with the amendments to the Income Tax Act.