Global Tax Alert | 22 May 2014

Taiwan’s Legislative Yuan passes tax reform bills

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On 16 May 2014, Taiwan's Legislative Yuan passed several tax reform bills (the Bill) proposed by the Ministry of Finance1 as measures to increase tax revenues.

Tax reform highlights

Increase in business tax on banking and insurance industries

Business taxes imposed on banking and insurance industries are increased from 2% to 5%. The 2% business tax for other financial industries, such as the investment trust industry will remain unchanged.

The Bill however does not become effective until an announcement is issued by the Taiwanese President.

Surtax credit

Under the tax reforms, only half of the total surtax paid by a company would be used as a credit against withholding tax on dividends distributed to nonresident shareholders in a subsequent period.

This Bill will become effective on 1 January 2015. The 50% limitation on the surtax credit would increase nonresident shareholders' withholding tax liability. Accordingly, the Taiwan investee companies may consider distributing retained earnings which have been subject to surtax as dividends to nonresident shareholders on or before 31 December 2014 to enable the nonresident shareholders to obtain the maximum amount of surtax credits. Due to complexities of creditable surtax calculations and timing considerations, seeking professional advice is highly recommended.


1. For more details, please refer to EY Global Tax Alert, Taiwan's Ministry of Finance introduces measures to raise tax revenues, dated 12 March 2014.

For additional information with respect to this Alert, please contact the following:

Ernst & Young (Taiwan), Taipei
  • Heidi Liu
    +886 2 2757 8888 ext. 2705
  • Sophie Chou
    +886 2 2757 8888 ext. 1610
  • Alice Chung
    +886 2 2757 8888 ext. 2712
  • Anna Tsai
    +886 2 2757 8888 ext. 1615
  • Michael Lin
    +886 2 2757 8888 ext. 1608
Ernst & Young LLP, Asia Pacific Business Group, New York
  • Chris Finnerty
    +1 212 773 7479
  • Kaz Parsch
    +1 212 773 7201
  • Bee-Khun Yap
    +1 212 773 1816

EYG no. CM4432