Taiwan Alternative Minimum Tax (AMT) Update under OECD Pillar Two / Global Minimum Tax (GMT)
In the context of global economic globalization and digitalization, multinational enterprise (MNE) groups have engaged in aggressive tax planning through low-tax jurisdictions or unconventional intercompany arrangements. This practice has led to the erosion of tax bases and revenue losses in many countries, drawing significant international attention.
From 2013 to 2015, the Organisation for Economic Co-operation and Development (OECD) and the G20 launched the Base Erosion and Profit Shifting (BEPS 1.0) project. In 2016, an inclusive framework was established to implement the conclusions of the final reports. Among the ongoing initiatives is addressing the tax challenges of the digital economy, and since 2019, two pillars have been actively promoted.
The second pillar – the Global Minimum Tax (GMT) – requires MNE groups to ensure that the effective tax rate (ETR) in each member jurisdiction is at least 15%. Currently, 142 of 147 OECD inclusive framework members support GMT, and 60 countries/regions have publicly announced measures to implement it. Neighboring countries such as Japan, South Korea, Singapore, and Hong Kong, as well as major trading partners including EU member states and Canada, have implemented GMT in 2024, with other countries expected to follow. GMT has become an irreversible wave of international tax reform, and a 15% minimum ETR is now widely recognized internationally.
The Ministry of Finance (MOF) of Taiwan notes:
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The current corporate income tax rate is 20%
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The current Alternative Minimum Tax (AMT) rate is 12%
If an MNE benefits from significant tax incentives, its Taiwan subsidiary’s ETR under GMT rules may fall below 15%, triggering potential GMT top-up tax. If Taiwan does not implement corresponding measures while countries or regions with close trade and investment ties do, the tax that would otherwise have been collected in Taiwan may instead be collected by foreign jurisdictions, resulting in loss of tax revenue to Taiwan.
To align with international trends and protect Taiwan’s taxing rights, the MOF has proposed the following AMT rate adjustments:
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From 2025 onward, MNE groups meeting the GMT threshold will have their Taiwan subsidiaries subject to AMT at 15%. (Examples are provided in the attachment.)
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GMT applicability threshold: Generally, the group’s consolidated revenue must exceed €750 million in at least 2 of the last 4 fiscal years.
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For businesses not meeting this threshold, the AMT rate remains 12%.
The MOF further explains that this adjustment:
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Targets large MNEs that excessively benefit from tax incentives, ensuring their ETR does not fall below 15%
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Does not affect SMEs or large enterprises already meeting the 15% threshold
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Follows the ability-to-pay principle while maintaining fair tax burdens across companies of different sizes
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Any increase in AMT will be included in the ETR numerator under GMT calculations, reducing the risk of foreign top-up tax
Currently, Taiwan has not yet mandated MNEs to submit reports or information related to GMT compliance.