Taiwan Tax Basics
Framework
IRON LAW: Three Taxes Every Taiwan Business Must Know
1. 營業稅 (Business Tax / VAT): 5% on sales, filed bimonthly
2. 營利事業所得稅 (Corporate Income Tax): 20% on profit, filed annually
3. 扣繳 (Withholding Tax): Withheld at source on payments to individuals/foreigners
Missing any filing deadline triggers penalties. Set up calendar reminders
for ALL filing dates at company registration.
Tax Calendar
| Tax | Rate | Filing Frequency | Deadline |
|---|
| 營業稅 (VAT) | 5% | Bimonthly | 15th of following odd month (Jan 15, Mar 15, May 15...) |
| 營所稅 (CIT) | 20% | Annual | May 1-31 (for prior year) |
| 暫繳 (Interim CIT) | 50% of prior year | Annual | September 1-30 |
| 扣繳 (Withholding) | Varies | Monthly + annual | 10th of following month; annual filing by Jan 31 |
| 個人綜所稅 | Progressive 5-40% | Annual | May 1-31 |
Corporate Income Tax (營所稅)
Taxable Income = Revenue - Cost of Goods Sold - Operating Expenses - Non-operating Deductions
Tax = Taxable Income × 20%
Special cases:
- Taxable income ≤ NT$120,000: tax-free
- NT$120,001 ~ NT$500,000: half rate applied on amount exceeding $120K
- > NT$500,000: full 20% rate
Common deductions:
- Employee salaries and benefits
- Rent, utilities, office expenses
- Depreciation on fixed assets
- R&D expenses (additional 200% deduction under 產創條例)
- Bad debt (with proper documentation)
Business Tax (營業稅 / VAT)
| Transaction | VAT Treatment |
|---|
| Domestic sales | Charge 5% → collect from buyer → remit to government |
| Domestic purchases | Pay 5% → claim as input tax credit |
| Export sales | Zero-rated (0%) — can still claim input credits |
| Import purchases | Pay 5% at customs → claim as input credit |
Filing: Net VAT = Output tax (collected) - Input tax (paid). If negative (more input than output), get a refund.
Withholding Tax (扣繳)
| Payment Type | Resident Rate | Non-Resident Rate |
|---|
| Salary | 5% (if monthly > certain threshold) | 6-18% |
| Professional service fees | 10% | 20% |
| Rent | 10% | 20% |
| Dividends | Included in personal income | 21% |
| Royalties | 10% | 20% |
| Interest | 10% | 20% |
Startup Tax Incentives
| Incentive | What It Does | Who Qualifies |
|---|
| 產創條例 R&D 投資抵減 | 15% of R&D spend as tax credit (or 10% over 3 years) | Companies with qualifying R&D activities |
| 天使投資人減稅 | Individual investors can deduct up to NT$3M from income | Investment in startups < 2 years old, held 2+ years |
| 員工認股權 (ESOP) | Deferred taxation on stock options until exercise | Companies issuing employee stock options |
| 營所稅 小規模免稅 | Taxable income ≤ NT$120K exempt | Very small businesses |
Output Format
# Taiwan Tax Assessment: {Company}
## Tax Obligations
| Tax | Applicable? | Rate | Next Filing |
|-----|-----------|------|------------|
| 營業稅 | Y/N | 5% | {date} |
| 營所稅 | Y/N | 20% | {date} |
| 扣繳 | Y/N | varies | {date} |
## Estimated Tax Liability
| Tax | Estimated Amount | Notes |
|-----|-----------------|-------|
| 營業稅 (net) | NT${X}/bimonth | Output - Input |
| 營所稅 | NT${X}/year | Revenue - Expenses × 20% |
## Available Incentives
| Incentive | Eligible? | Estimated Benefit |
|-----------|----------|------------------|
| {incentive} | Y/N | NT${X} |
## Action Items
1. {immediate tax action needed}
Gotchas
- 營業稅 and 營所稅 are different taxes: 營業稅 is VAT on transactions (5%). 營所稅 is corporate income tax on profit (20%). Both are required. Don't confuse them.
- Input VAT requires 統一發票: You can only claim input tax credits with proper 統一發票 (uniform invoice). Receipts (收據) from non-registered vendors don't count.
- Foreign service payments: Paying a foreign SaaS provider (AWS, Google, etc.)? You must withhold 20% tax and report it, unless a tax treaty applies. Many startups miss this.
- Transfer pricing for cross-border: If you have related-party transactions with overseas entities, transfer pricing rules apply. Document arm's-length pricing.
- This is educational guidance, not tax advice: Taiwan tax law is amended frequently. Consult a licensed CPA (會計師) for specific tax situations and filings.
References
- For e-invoice system, see the tw-einvoice-guide skill
- For detailed CIT deduction rules, see
references/cit-deductions.md
