Taiwan’s Ministry of Finance has issued guidance on income tax withholding, non-withholding tax statements, and calculating corporate taxes for foreign companies.
Optimised income tax withholding system
According to an announcement by Taiwan’s Ministry of Finance, in order 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.
Entities will now handle tax withholding instead of individuals. In addition, tax payment deadlines will be extended during holidays, and non-compliance penalties will be updated.
Non-withholding tax statements for exempt payments are due to the National Taxation Bureau by the end of January every year. If three national holidays fall in a row, the deadline extends to 5 February, with penalties for non-compliance.
Tax calculation for foreign enterprises
This initiative has been introduced to simplify tax calculations and reduce refunds for foreign businesses and domestic buyers. Foreign enterprises can use the net profit ratio and domestic profit contribution ratio to determine taxable income and withholding tax before receiving payments from Taiwan.
