APAC Tax Matters: 12th edition

Taiwan

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At a glance

  • Applicable tax rate for alternative minimum tax {AMT}
  • Germany-Taiwan tax agreement enters into force

Taiwan’s Executive Yuan has promulgated the applicable tax rate for the alternative minimum tax (“AMT”) prescribed in the Income Basic Tax Act to be 12%

Further to the recent introduction of taxation on capital gains on securities transactions and the amendment to the Income Basic Tax Act on 25 July 2012, Taiwan’s Executive Yuan issued a ruling (Ruling No. 1010058943) on 27 September  2012 to prescribe that the AMT rate applicable to business entities is 12%, effective1 January 2013.

Tax agreement between Germany and Taiwan enters into force

The Germany-Taiwan agreement on the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital was signed by The German Institute in Taipei and The Taipei Representative Office in the Federal Republic of Germany on 12 December 2011.

According to the agreement:

  • Withholding on dividends will be  10% as opposed to 20% in Taiwan and 25% (plus a 5.5% solidarity surcharge) in Germany
  • Withholding on interest income shall not exceed 10% to 15% while withholding tax on interest for non-treaty jurisdictions is 15% to 20% in Taiwan and 0% or 15% (plus a 5.5%solidarity surcharge) in Germany
  • Royalties will be taxed at 10% as opposed to 20% in Taiwan and 15% in Germany

The agreement entered into force on 7 November 2012. The tax agreement's benefits will become effective on 1 January 2013.