Taiwan’s Ministry of Finance (MOF) released an updated list of low-tax jurisdictions on 27 December 2024.
Controlled Foreign Company (CFC) rules, which have been in effect in Taiwan since the 2023 tax year, were introduced to prevent companies or individuals from setting up CFC in low-tax jurisdictions as a means of avoiding tax obligations in Taiwan. These rules require Taiwanese individuals and companies with control over foreign entities in low-tax regions to report CFC income and pay taxes in Taiwan, even without dividend declarations.
Key updates include the addition of 31 jurisdictions with corporate tax rates below 14% (70% of Taiwan’s 20% corporate tax rate), which now includes the United Arab Emirates (UAE).
The 31 jurisdictions are : Andorra, Anguilla, Bahamas, Bahrain, Barbados, Bermuda, BES Islands, Bosnia and Herzegovina, British Virgin Islands, Bulgaria, Cayman Islands, Cyprus, Guernsey, Hungary, Ireland, Isle of Man, Jersey, Kosovo, Kyrgyzstan, Liechtenstein, Macau, Marshall Islands, Moldova, North Macedonia, Palau, Paraguay, Qatar, Timor-Leste, Turks and Caicos Islands, United Arab Emirates, and Vanuatu.
Additionally, 48 jurisdictions with territorial or offshore tax systems are listed with Chad, Niger, and the UAE removed from this category. The jurisdictions are: Belize, Bolivia, Botswana, Brunei, Costa Rica, Curacao, Democratic Republic of the Congo, Djibouti, El Salvador, Eritrea, Eswatini, France, French Guiana, French Polynesia, French Southern Territories, Georgia, Gibraltar, Guadeloupe, Guatemala, Guinea-Bissau, Honduras, Hong Kong, Kenya, Kuwait, Libya, Malawi, Malaysia, Martinique, Mayotte, Micronesia, Monaco, Namibia, Nauru, New Caledonia, Nicaragua, Palestine, Panama, Reunion, Saint Barthelemy, Saint Martin (French Part), Saint Pierre and Miquelon, Saint Vincent and the Grenadines, Seychelles, Singapore, Syria, Tuvalu, Uruguay, and Wallis and Futuna.
A CFC is a business entity registered and operating in a jurisdiction different from the residency of its controlling owners. In the context of Taiwanese tax regulations, a CFC refers to a corporation based in a low-tax jurisdiction that is directly or indirectly owned with at least 50% shareholding or significantly influenced by a Taiwanese tax resident, whether an enterprise or an individual.
