Taiwan’s Ministry of Finance released new guidance clarifying the tax implications of scholarship-related expenses on 19 May 2025.

A foreign company inquired by phone with the National Taxation Bureau about whether they could claim expenses for establishing scholarships for employees’ children, as they have invested in Taiwan for many years and wish to enhance their company welfare and multinational corporate image.

The National Taxation Bureau of Kaohsiung, Ministry of Finance, states that whether scholarship expenses established by profit-seeking enterprises can be claimed as company expenses depends on the recipients and conditions. If a company establishes scholarships for employees’ children with clearly defined application criteria, the scholarship payments can be recorded under “Other Expenses.”

However, scholarships for customers’ and shareholders’ children cannot be claimed as company expenses under Article 38 of the Income Tax Act and Article 62 of the Regulations Governing Assessment of Profit-seeking Enterprise Income Tax, as they are not related to the main business or auxiliary operations.

The Bureau further explains that if a company establishes scholarships for employees’ children with application requirements based on academic or conduct performance standards, the received scholarships can be exempt from reporting as employee income under Subparagraph 8, Paragraph 1, Article 4 of the Income Tax Act.

Without such reward conditions, the payment would be considered educational assistance for employees’ children, classified as a form of salary that must be included in the employee’s salary income for withholding tax purposes.