[Taxation] Lowering of Various Income Tax Withholding Rates

In order to build a better tax environment and enhance Taiwan’s international competitiveness, the Ministry of Finance has revised the Standards of Withholding Rates for Various Incomes to reduce and unify a number of income tax rates. The revisions will go into effect on January 1 next year, after approval from the Executive Yuan. To attract foreign professionals to Taiwan, the MOF will reduce the withholding rate on the salaries of non-residents (see note) from 20% to 18%. Also, the withholding rates applicable to foreigners for interest from short-term commercial papers, securitized products, bonds and other such financial instruments, and for income from dealings in structured products, will be reduced from 20% to 15%. At the same time, to maintain tax neutrality, non-residents (including overseas Chinese), profit-seeking enterprises headquartered abroad, mainland Chinese juristic persons or entities, and persons from the mainland area staying in Taiwan for less than 183 days in a year, regardless of whether their investment applications have been approved in accordance with pertinent regulations, will be subject to a reduced uniform tax rate of 20% on net dividends or net profits. In addition, to address the current variation of withholding rates among different financial products and simplify withholding procedures, with effect from next year, for persons residing in the ROC and profit-seeking enterprises with a fixed place of business in the ROC, income from transactions in structured products and interest earned from securitized products, short-term bills and notes, will be subject to separate taxation at a uniform withholding rate of 10%.