Taiwan has tax treaties signed with over 30 countries. This is to prevent double taxation and allow cooperation with overseas tax authorities in enforcing tax laws.
In Taiwan, a foreign individual or corporation of which is resident in the country that has tax treaty with Taiwan, would follows the terms and conditions stated in the tax treaty and enjoy the benefit of withholding tax (WHT) reduction or exemption.
預扣所得稅WITHHOLDING TAX
有常設機構 (PE) 的非居民公司（常設機構的條款和條件在稅收協定中有所規定），其徵稅方式與居民公司相似。
第 73 條規定，來自台灣非居民個人或沒有 PE 的公司的台灣來源收入（TSI）將受到預提稅。
台灣的預扣稅可適用於以下情況：
A non-resident company with Permanent Establishment (PE) (terms and conditions of PE is stated in tax treaties), is taxed similarly to a resident company.
Article 73 states that Taiwan Source Income (TSI) derived from non-resident individual or company without PE in Taiwan would be subject to WHT.
WHT in Taiwan may applies to the followings:
Payments to nonresident individuals and companies such as dividend, commission, interest, rental, royalties and TSI.
Payments to resident individual and companies such as salaries to employees, rent to individual landlord, compensation, professional fees to lawyer or Certified Public Accountant (CPA).
Generally a Taiwanese resident making payments for services to a nonresident service provider (whether corporate or individual) is required to withhold income tax at the rate of 20% where the payments constitute TSI.
Article 8 of Income Tax Law and Article 15-1 of Taiwan Sourced Income (TSI) Guidance, foreign companies without permanent establishment (PE) derived income in Taiwan are subject to WHT. Amendment for Article 15-1 has applied deemed profit ratio method to calculate the WHT rate.
WHT rate = Deemed profit ratio (*) X Contribution ratio (**) X 20%
* Deemed profit ratio can be obtained from accounting record or similar contract or industry comparable.
** Contribution ratio has to be certified by COA or from similar approved contract or 100%.
Article 25-1 of Income Tax Law, any profit-seeking enterprise engaging the stipulated business and having its head office outside the territory of the Republic of China (R.O.C), can instead apply the following deemed profit ratio to calculate the WHT rate.
Business of foreign enterprise
Deemed profit ratio (A)
WHT rate (B)
Effective WHT rate (A X B)
International transport business
10%
20%
2%
Construction contracting
15%
20%
3%
Technical services
15%
20%
3%
Machinery and equipment leasing
15%
20%
3%
經稅務機關批准，例如200萬新台幣技術服務費將產生30萬新台幣（新台幣200萬X 15％）的視為利潤，因此預扣稅金額為新台幣6萬（新台幣30萬X 20％）或（新台幣2 百萬 X 3%）。
如果沒有獲得稅務機關的批准或申請被拒絕，預提稅為 40 萬新台幣（新台幣 200 萬 X 20%）。
Upon approval from tax authority, for example technical service fee of NTD 2 million would yield deemed profit of NTD 300,000 (NTD 2 million X 15%), hence the WHT amount would be NTD 60,000 (NTD 300,000 X 20%) or (NTD 2 million X 3%).
WHT would have been NTD 400,000 (NTD 2 million X 20%) if no approval obtained or application rejected from tax authority.
Generally, these are the withholding tax rates and applicable to concerning countries with whom Taiwan does not have a Double Taxation Agreement (DTA).
No.
Type of Payments
DTA rates
Remarks
1
Business profits (without PE)
20% (Max)
Can apply deemed profit ratio as in Article 15-1 or Article 25-1
Article 88 of Income Tax Law states that the withholder shall withhold tax payable at the time of payment and pay in accordance to Article 92. Withholder of resident taxpayer shall pay within 10th of each month and submit withholding certificate to tax authority by January each year and provide to taxpayers before 10 February each year. While the withholder of non-resident shall pay and submit withholding certificate within 10 days from withholding.
The withholding tax is a final tax unless the nonresident service provider appoints a tax agent in Taiwan who can apply for a refund of excess tax withheld by filing a tax return.
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