To Foreign business doing business with Taiwanese customer:
The Ministry of Finance (MOF) of Taiwan has recently announced a proposed amendment to Article 34 of the "Income Tax Agreement Audit Guidelines." This amendment aligns with the extended correction application period under the Tax Collection Act implemented four years ago. It extends the time limit for applying for tax treaty benefits from the current 5 years to 10 years, offering international businesses more time to claim preferential tax rates on income derived from Taiwan transactions, such as dividends, interest, technical service fees, or royalties.
Key Highlights of the Amendment:
- Extended Application Period: International businesses will have up to 10 years from the date of earning the relevant income to apply for the preferential tax rates under applicable tax treaties.
- Applicable Income Types: The amendment covers income listed in the prevailing tax treaty such as: dividends, interest, technical service fees, or royalties earned in Taiwan.
Important Notes:
- The amendment is currently in the proposal stage and has not yet come into effect.
- Businesses are advised to closely monitor the progress of this amendment and, once finalized, apply for tax treaty benefits within the new timeframe.
Recommendations for Businesses:
- Collaborate with professional tax advisors to ensure eligibility and complete the application process within the extended time limit.
- For tax treaties with specific, shorter application periods, the treaty provisions take precedence under the principle of legal priority.
- Stay updated with announcements from the MOF regarding the amendment's latest developments and effective date.
https://join.gov.tw/policies/detail/34755bd7-3888-4031-b4b2-1054b755cf2a
