tw-tax-basics

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