Taiwan Income Tax Guide

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Company Income Tax - Tax on profit:

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Accounting and tax filing requirements in Taiwan

Taiwanese companies are required to maintain accounting records and prepare annual financial statements in accordance with Taiwan Generally Accepted Accounting Principles (GAAP).  The tax rule may not always be the same as the GAAP. 

 

Tax year: Calendar year January 1st ~December 31st

Filing and payment: A Taiwan company must file income tax returns and pay any tax due between 1 May and 31 May of the year following the tax year.

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Tax rate: 20% 

Despite the forms of company structures, the Limited company (有限公司), the Company Limited by Shares(股份有限公司), and the Branch Office of a Foreign Company(外國公司台灣分公司), the corporate tax rate is 20%.  

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Losses can carry forward for ten years

Companies that have their tax returns certified by a CPA (Certified Public Accountant) and do not defraud the revenue may carry losses forward for ten years. Losses may not be carried back.

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Provisional income tax

Companies registered in Taiwan or the Taiwan branches of foreign companies are required to remit, on the 30th day of September each year, an amount equal to half of the income tax payable of their previous year's tax return.

Provisional income tax is actually the prepaid tax payment that the company can deduct the tax payable with the paid provisional tax payment when they file the current year's tax return. Please see Provisional Tax and Relief for detailed information.

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The tax of Branch Office versus Tax of Subsidiary

Subsidiaries are subject to withholding taxes; however, there is no withholding tax on the remittance of after-tax profits by a branch to its foreign head office. The withholding tax on dividends paid to foreign shareholders is 20% if no tax treaties.

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Value-added tax(VAT/Sales Tax)

Value-added tax (VAT), also known as Sales Tax, is imposed based on the incremental value infused into goods or services during various stages within the production and distribution process. The standard VAT rate stands at 5%. However, certain items fall within the category of zero-rated transactions, which include exports, services directly linked to exports, merchandise vented by duty-free establishments, and products distributed to entities operating within tax-exempt export zones. Compliance entails the submission of a VAT return on a bimonthly basis, with corresponding payments to be tendered concurrently with the return filing. Please see VAT and GUI introduction for detailed information.

 

Profit retention tax

Any current earnings of a corporation that are not dispersed before the end of the next year are subject to an extra 5% profit retention tax. Foreign firms' Taiwan subsidiaries are exempt from the profit retention tax.

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