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To maximize the benefits of investing in Taiwan, it is vital that investors consider, as early as possible, both the tax planning opportunities and the specific tax obligations their nvestment presents.

This document is prepared to help explain the tax and legal obligations of the employer when terminating an employment relationship in Taiwan.

Many foreign enterprises operating in Taiwan through a local subsidiary or branch adopt a cost-plus approach to determine the Taiwan entity's remuneration. Under this model, the Taiwan company typically provides support, maintenance, or business services to the foreign parent or affiliated company, while the foreign entity sells goods directly to Taiwanese customers and ships from abroad.

Taiwanese resident corporations are subject to income tax on their worldwide income. Non-resident corporations, on the other hand, are subject to tax only on income derived within Taiwan through a branch or agent.

Taiwan levies value-added tax (VAT) on all taxable transactions that take place in the Republic of China (Taiwan), regardless of whether or not both parties to the transaction are located in Taiwan.

In order to be more in line with international standards, the Taiwan Government has amended tax regulations relating to use of logistics warehouses.

CFC stands for controlled foreign corporation. In order to better protect Taiwan’s tax base and follow international trends, Taiwan will introduce CFC rules effective from 1 January 2023. This is meant to prevent tax loopholes that result from complex international tax planning via CFCs

Taiwanese resident corporations are subject to income tax on their worldwide income. Non-resident corporations, by contrast, are subject to income tax only on income derived from sources within Taiwan, generally through a branch, agent, or other taxable presence.

Grant Thornton Taiwan was founded in 1971. The firm is committed to providing high-quality services to clients. We work closely with our international organisation, constantly developing new service lines to meet the needs of international clients. We are also registered with the U.S. Public Company Accounting Oversight Board (PCAOB) and are ISO 9001 and ISO 27001 certified.

Understanding Taiwan’s Compliance Requirements All companies registered in Taiwan, regardless of whether they are foreign or locally owned, must be in compliance with Taiwan’s regulations. Much of the requirements come from the Labor Standard’s Law, the Company Act and related rulings issued by Government Authorities.

Taiwan’s Ministry of Finance has announced that it will require taxpayers who meet certain criteria to prepare three layers of transfer pricing documentation.

The Statute for Industrial Innovation in Taiwan provides a legal framework for boosting industrial upgrading, R&D, and competitiveness through tax incentives.

Effective from 1 January 2013, in addition to the regular NHI premium, insured units (employers) are required to withhold a new premium, called the “supplementary premium,” before paying out certain categories of income, and making premium payments to the National Health Insurance Administration (NHIA) accordingly.

Based on Income Tax Regulations that have existed for some years in Taiwan, hi-tech Companies and some high net worth individuals often make use of various tax planning tools to reduce or eliminate income tax liability. These Companies and individuals while representing a significant portion of Taiwan economy, yet only contribute limited amount of tax to society as a whole. As an effort to address this imbalance, Taiwan Tax Authority officially introduces Alternative Minimum Tax System effective from 1 January 2006. There are two AMTs, one for individuals and the other for corporations.

Qualifying foreign enterprises may apply for an advance ruling under Article 25 of the Income Tax Act, which allows corporate income tax to be assessed based on a deemed profit percentage.

Taiwan-registered companies are required to annually report information regarding responsible persons and key shareholders during the period from March 1 to March 31.