Taiwan Tax Treaties with UK

E-mail: tpe4ww@evershinecpa.com
or
Contact us during office hours  (Taipei and China Time Zone)
Director Jerry Chu, USA Graduate School Alumni and a well-English speaker
Mobile: +886-939-357-735
Tel No.: +886-2-2717-0515 ext. 103

UK-Q-10:
United Kingdom Parent Company, can apply for zero tax rate without PE under DTA in Taiwan?

UK-A-10:

Yes.
United Kingdom has DTA with Taiwan, and if the United Kingdom Legal Resident company is without PE (Permanent Establishment), it will be deemed as “non-Taiwan Domestic Sourced Income”.
That means Taiwan will levy zero-tax.
However, the United Kingdom Legal Resident company still needs to send the zero-tax application to Taiwan Tax Bureau for being approval.

UK-Q-20:
When United Kingdom Parent Company as an Investor, setup a Taiwan subsidiary, and provide services from the United Kingdom to Taiwan Subsidiary, can apply for zero tax rate without PE under DTA in Taiwan?

UK-A-20:
According to DTA Article 5 item 7, A Taiwan subsidiary will not be treated as PE of the United Kingdom Parent company as an investor because it is a separate legal entity.
That means if a Taiwan Subsidiary pay service fee to United Kingdom Parent Company through service contract signed between subsidiary and United Kingdom Parent company.
As an investor, United Kingdom Parent Company can apply zero tax.
As for if paid amount being reasonable, it will get involved TP (Transfer Pricing) judgement by Taiwan Tax Bureau.

UK-Q-30
What is the procedure for Taiwan to apply for a zero tax rate under DTA without PE?

UK-A-30

Non-resident in Taiwan who wishes to avail treaty benefits are required to furnish the following to the Taiwan Company (Tax deductor) and they will file to the tax bureau.

1. Tax Residency Certificate (TRC) from the country in which the non-resident is the resident.
2. A No PE declaration letter (prescribed format), to prove the Foreign Company does not have a “PE” in Taiwan.
3. Relevant documents providing information of the income (eg. Billing statement, invoice, service procedures, the evidence of service).
4. Original application form for a Foreign Profit-Seeking Enterprise to Exempt its Business Profits from Tax under an Agreement for the Avoidance of Double Taxation.
5. Original power of attorney (for application on behalf).
6. Photocopy of agreement (including Chinese translation).

Submit the above application documents to the taxation authority in the place where the payer is located.
Refer to the below website for further forms and details: https://www.ntbna.gov.tw/multiplehtml/8e6b810dcee94ddc822e96c950ff430f

UK-Q-40
When United Kingdom Resident company has Taiwan domestic sourced income, what are the withholding tax rates for various incomes in Taiwan?

UK-A-40:

United Kingdom has DTA with Taiwan, and if you are with PE (Permanent Establishment) in Taiwan, your income will be considered as Taiwan domestic sourced income.
As for levying Tax Rate, please be aware:
if Taiwan Tax rate > DTA Rate, adopt DTA Rate; if Taiwan Tax rate < DTA Rate, adopt Taiwan Rate.
If DTA applied, the DTA rates between the United Kingdom and Taiwan are as below:

No.	Type of Payments	DTA rates	Taiwan Rates	Applicable Rates
1	Business profits (with PE)	20%	20%	20%
2	Dividends	10%	21%	10%
3	Interest (General)	10%	20%	10%
4	Royalties fee	10%	20%/0%	10%
5	Technical services	0%	3%	0%
6	Professional services (Individual)	0%	20% (Max)	0%

*The withholding tax rate under domestic law may apply rather than the treaty rate where the domestic law rate is lower than the treaty rate.

UK-Q-50
When the United Kingdom Tax Resident has Taiwan domestic sourced income, what is Taiwan’s application procedure based on the DTA preferential tax rate?

UK-A-50:
Non-resident in Taiwan who wishes to avail treaty benefits are required to furnish the following to the Taiwan Company (Tax deductor) and they will file to the tax bureau.

1. Tax Residency Certificate (TRC) from the country in which the non-resident is the resident.
2. Relevant documents providing information of the income (eg. Billing statement, invoice, service procedures, the evidence of service).
3. Original application form for the Calculation of Business Revenue for Foreign Profit-seeking Enterprise in Accordance with the Provisions of Paragraph 1, Article 25 of the Income Tax Act.
4. The original power of attorney (for application on behalf).
5. Photocopy of agreement (including Chinese translation).

Submit the above application documents to the taxation authority in the place where the payer is located.
Refer to the below website for further forms and details: https://www.ntbna.gov.tw/multiplehtml/1b4a2f4b58d943cdb3c90aaa628a40de

Summary of Tax Treaty between Taiwan and the United Kingdom

Taipei Representative Office in the United Kingdom and The British Trade and Cultural Office, Taipei concluded and signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Double Taxation Agreements, DTA), on 8 April 2002 and takes effect from 01 April 2003.

Permanent Establishment

Article 5 states the term permanent establishment (PE) means a fixed place of business which generally includes the followings:
A place of management
A branch
An office
A factory
A workshop
The furnishing of services, includes consultancy services, through employees or other personnel for periods aggregating more than 6 months.

Withholding Tax

No.	Type of Payments	DTA rates	Article in DTA	Taiwan Rates	Applicable Rates
1	Business profits (without PE)	0%	Article 7	0%	0%
2	Business profits (with PE)	20%	Article 7	20%	20%
3	Dividends	10%	Article 10	21%	10%
4	Interest (General)	10%	Article 11	20%	10%
5	Royalties fee	10%	Article 12	20%/0%	10%
6	Technical services	0%	Article 7	3%	0%
7	Professional services (Individual)	0%	Article 14	20%	0%

*Article 7 of DTA between the United Kingdom and Taiwan explained, an enterprise may not tax payments for business profits unless it is attributable to the permanent establishment situated in Taiwan.

*In the Article 10, dividends paid by a Taiwan Resident enterprise to United Kingdom Resident enterprise, the tax so charged shall not exceed 10% of the gross dividends.

*Article 11 states that where beneficial owner of the interest (exclude the interest from government) is a non-resident, shall be taxed in the territory in which it arises at the rate not exceeding 10% of the gross interest.

*Article 12 explained royalties means payment for the use of, right to use, copyright of literary, artistic, or scientific work, any patent, trademark, design or model plan, secret formula or process, information concerning industrial, commercial, or scientific experience.
Payment for royalty is taxed at 10%.

*Technical services rendered are covered by the business profits article. Taiwan, as the source country, may not tax payments for technical services rendered by a UK enterprise unless the payments are attributable to a PE that the UK enterprise has in Taiwan.
Fees for technical services rendered by a UK resident individual are covered by Article 14 Professional services.

*Professional services or other activities provided by individual of an independent character was explained in Article 14. Taiwan may not tax payments for professional service rendered by a United Kingdom resident unless the UK resident has a fixed place or stay in Taiwan for 183 days or more. An independent profession includes physicians, lawyers, engineers, architects, dentists, and accountants.

Elimination of Double Taxation

Article 22 of the DTA states that double taxation shall be eliminated by allowing tax credit to be made available to the home resident territory. It shall be credited against the tax levied in the first-mentioned territory on that resident. However, the amount of credit shall not exceed the amount of the tax in the first-mentioned territory.

Exchange of Information

Article 26 states that the competent authorities of the territories shall exchange such information relevant to the provision of this Agreement.

Please be aware of below Warning:
The above contents are digested by Evershine R&D  and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Taiwan Tax treaties with other countries

Contact us:
E-mail: tpe4ww@evershinecpa.com
or
Contact us during office hours  (Taipei and China Time Zone)
Director Jerry Chu, USA Graduate School Alumni and a well-English speaker
Mobile: +886-939-357-735
Tel No.: +886-2-2717-0515 ext. 103

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(version: 2024/07)

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