On 26 September 2019, Taiwan’s Ministry of Finance (MOF) released a tax ruling regarding the new method of calculating income source from Taiwan originating from foreign entities amending article 15-1 in accordance with Article 8 of the Income Tax Act.
Foreign enterprises without fixed business place and business agent in Taiwan receiving service remuneration and operating income, according to the assessment result will calculate and report tax return, or the tax withholder will withhold the tax based on applicable withholding rate accordingly. According to the article 15-1, foreign entities without permanent establishment (PE) in Taiwan, which derives Taiwan-source income under the category of services income or business profit, can apply to the tax authority to adopt deemed profit ratio and contribution ratio to calculate its taxable income in Taiwan.
Article 15-1 clarifies about the required documents for the application and provides more flexible options to calculate the taxable income foreign entities.
