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Taiwanese Special Scheme For Foreign Firms Time Limited

by Mary Swire, Tax-News.com, Hong Kong

22 August 2014


The Ministry of Finance has reminded foreign companies engaged in certain industries in Taiwan that there is a time limit on the availability of the percentage expenses deduction allowed under Article 25 of the country's Income Tax Act.

That Article applies to any "profit-seeking enterprise" that has its head office outside of Taiwan and is engaged in the country in the provision of international transport, construction contracting, or technical services, or machinery and equipment leasing, and which has difficulty in calculating the costs and expenses of those business activities.

The foreign company may apply for approval from the Ministry, or the Ministry may make the decision, to allow deduction of a fixed percentage of its costs and expenses based on total business turnover. For businesses engaged in international transport this is 10 percent of total income derived from Taiwan, regardless of whether or not it has a branch office or business agent there, or 15 percent of total revenue, under the same conditions, for businesses engaged in the remaining activities covered by the special scheme.

However, the Ministry also warned that the right of any enterprise to apply the flat-rate percentage will be revoked if such right is not exercised within five years. In other words, enterprises should submit the relevant documents for approval to the Taiwanese tax authority within five years after first receipt of income.

TAGS: compliance | Finance | tax | business | marine | tax compliance | aviation | corporation tax | Taiwan | ministry of finance | tax authority | services | Tax

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