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미래전략 연구소2020-08-05T16:50:09+09:00

Taiwan How to Maintain the Company in Taiwan

Date
2020-12-08 11:05
1. Provisional Income Tax Return
Provisional income tax return is an immediate collection system that assists in the corporate income tax filing. During the period of provisional income tax return, profit-seeking entities have to calculate and pay the tax for the period of 1st half of fiscal year. The paid tax will be offset the payable tax in the current year’s annual corporate income tax.

If there is a surplus after offsetting, it can be used to pay the additional tax on the previous year’s undistributed retained earnings or be refunded. The purpose of provisional income tax return is to reduce the pressure on taxpayers to pay a large amount of corporate income tax for one time. The filing period is from September 1 to September 30 every year for entities whose fiscal year is ended at December 31st.

2. Corporate Income Tax
The profit-seeking entities are required to report its profit for the previous year by filing a statement of settlement from May 1st to May 31st every year. The payable corporate income tax is “taxable income” × corporate income tax rate(20%). The “taxable income” can be calculated in three different methods:

(1) Deemed Profit Ratio
It is applicable to small and medium-sized corporations whose annual operating revenue and non-operating income do not exceed NTD 100 million in total. There is no need to deduct actual costs and provide accounting books, and only need to calculate the taxable income according to the profit ratio(depend on different industries) announced by the government for each year.
The taxable income is: (Annual net operating revenue + non-operating income) × Announced net profit ratio(if revenue is below NTD 30 million, can enjoy a lower rate about 4%-10%)

(2) Tax Filing without CPA Audit
It is applicable to the corporations with annual operating revenue lower than NTD 100 million. You need to provide accounting books and calculate income based on actual profits and losses. The taxable income is: (All revenue/income in the same fiscal year) - (All costs and expenses). This method of filing is based on the actual profit. If the company is in a loss for the year, there is no tax payment, but the loss cannot be carried forward to offset the taxable profit in the future.

(3) Tax Filing with CPA Audit
All profit-seeking entities with annual operation revenue more than NTD 100 million will be subject to audit by CPA. The calculation of taxable income is based on the actual profit. A CPA engaged by the entity will verify the bookkeeping and issue the tax audit report. An entity whose engaged with a CPA for tax audit can enjoy the loss carryforward for 10 years in the future.

3. Business Tax Filing
The business tax shall be levied on the sale of goods or services provided within Taiwan’s territory, as well as the import goods into Taiwan. The business tax filings must be filed bimonthly before the 15th day of the following period and tax due must be paid at that time.

The business tax filing date is the 15th day of every odd month; e.g. a business tax return for January and February must be filed and tax amount paid before March 15. Business entities that qualify for the 0% VAT rate may apply to the tax office to file the tax return on a monthly basis.

The business tax rates are as below:
(1) VAT(Value Added Tax): 5%(0% for exporting goods or services)
(2) Non VAT(Non Value Added tax): 0.1~25% depends on the industry and business activity

4. Withholding Tax Filing for Various Incomes
When a taxpayer pays salary, interest, rent, royalties, dividends, etc., it shall withhold certain tax amount according to the prescribed withholding rate and pay to tax bureau by (1) 10 calendar days if the payee is a non-resident (2) the 10th of the following month if the payee is a resident.

The taxpayer should file the annual withholding declaration to tax bureau before January 31st of following year. The withholding statement should be distributed to the payee by February 10th.

5. Declaration of Representative and Shareholders
Corporations shall report the names of directors, managers and supervisor via the reporting platform in a yearly basis. The annual reporting deadline is March 15th and, if there is any change or update of information, it has to be reported within 15 days after the change.

* Source: Ministry of Finance