Property Trading Tax for Foreigners Cut to 20%

To attract more foreigners to invest in Taiwan and accommodate the Executive Yuan’s policy of “Friendly Measures for Foreign Professionals,” the Ministry of Finance (MOF) has moved to simplify withholding rates for foreigners in Taiwan by revising the “Standards for Withholding Rates for Various Incomes.” This revision cuts the withholding rate for income derived by foreign nationals and foreign enterprises (so long as they have no fixed place of business or representative in Taiwan) from trading in property to 20%, reducing the rates by 15 and 5 percentage points, respectively. The MOF notes that there are currently different withholding rates on income depending on the type of income and status of the taxpayer. The current withholding rates on income derived from property trading and stock dividends by foreigners is 35% and 30%, respectively, which is close to the maximum income tax rate of 40% for local citizens. It is also higher than the separate tax of 20% that is levied on foreigners for other types of income. The withholding rate revision cuts the tax rate for income derived by foreigners from property trading from 35% for foreign nationals and 25% for foreign enterprises to a uniform 20%. The withholding rate for income from stock dividends distributed to non-resident foreigners by investment projects that are not approved by the Investment Commission will be 30%. Current tax preferences for foreigners investing and working in Taiwan include, for foreign professionals earning a monthly salary of NT$100,000 or more, tax exemptions for travel and moving expenses, utilities and telephone fees paid in Taiwan, and scholarships for children. For those who invest in new biopharmaceuticals, 35% of spending on R&D and personnel can be deducted from taxes. A five-year tax holiday or tax offset is provided for investments in international logistics.