{"id":90746,"date":"2023-11-10T09:39:51","date_gmt":"2023-11-10T01:39:51","guid":{"rendered":"https:\/\/premiatnc.com\/tw\/?p=90746"},"modified":"2024-03-11T11:16:56","modified_gmt":"2024-03-11T03:16:56","slug":"taiwan-technical-service-tax-refund","status":"publish","type":"post","link":"https:\/\/premiatnc.com\/tw\/blogging\/taiwan-technical-service-tax-refund\/","title":{"rendered":"Discover the Benefits of Taiwan Technical Service Tax Refund\u00a0"},"content":{"rendered":"\n
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In the current global business environment with frequent transactions and intense competition in pricing, enterprises must carefully calculate the related costs incurred in their dealings. According to the current tax regulations, foreign companies without a fixed place of business in Taiwan are subject to a withholding tax rate of up to 20% on income earned from services provided in Taiwan. In practice, the income withholding tax<\/a> that should be borne by foreign companies is often shifted to Taiwanese companies during business negotiations, thereby increasing the transaction costs between Taiwanese companies and foreign companies. <\/p>\n\n\n\n

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Book Your Free Taxation Advisory Now!<\/a><\/div>\n<\/div>\n\n\n\n
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Understanding Article 25 of Taiwan Income Tax Act <\/h2>\n\n\n\n

Any foreign companies having its head office outside of Taiwan, and which is engaged in International Transport, Construction Contracting, providing Technical Services, or Machinery and Equipment Leasing, etc., in Taiwan, and the cost and expenses of which are difficult to calculate may apply for approval of lower withholding tax rates from the National Tax Bureau. <\/p>\n\n\n\n

Lowering Withholding Tax Rates <\/h2>\n\n\n\n

Foreign companies operating internationally in Taiwan<\/a> but based outside the Republic of China (ROC) can apply for a determination of their assessable income from the National Tax Bureau if it’s difficult to calculate costs and expenses for businesses. The assessable income for international transport is determined at 10% of their operating revenue within Taiwan, and for all other businesses, it’s calculated at 15% of their operating revenue within Taiwan as the companies\u2019 income. <\/p>\n\n\n\n

Example<\/strong>:<\/p>\n\n\n\n

If a foreign company is a technical service provider and obtains an approval of Article 25 of Taiwan Income Tax Act, the withholding tax rate is reduced from 20% to 3%. The calculation is as below: <\/p>\n\n\n\n

Approved withholding tax rate = 20% * 15% = 3% <\/p>\n\n\n\n

Documentation and Submission <\/h2>\n\n\n\n

The application itself is not a mere formality; it requires a comprehensive set of documents to support the request<\/a>. The applicants are required to submit the “Application of foreign profit-seeking enterprise for calculating income in accordance with Paragraph 1 of Article 25 of Income Tax Act.” Besides this application, the original power of attorney and a copy of the service contract are also mandatory. These documents should be presented in both their original language and a Chinese translation for clarity. <\/p>\n\n\n\n

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Boost Your Business With Our All-In-One Taxation Solution!<\/a><\/div>\n<\/div>\n\n\n\n
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Application and Tax refund <\/h2>\n\n\n\n

Not only Taiwanese companies should pay attention to any changes in their own equity, but foreign companies should also review whether they have earned income for related services that meet the criteria of Article 25 of the Income Tax Act. If relevant transactions with foreign companies have generated income and have been in place for more than 5 years but less than 10 years without application for Article 25 of the Income Tax Act, the companies can prepare the necessary documentation to apply for approval from the National Taxation Bureau. They can then, based on the approval letter, apply for a refund of any overpaid taxes<\/a> to reduce the actual transaction costs for those bearing the tax burden. <\/p>\n\n\n\n

Errors in the submission <\/h2>\n\n\n\n

Due to the increasing volume of international transactions, applications from foreign companies have been on the rise. Unfortunately, a significant portion of these applications gets rejected due to errors in the submission. These errors can be categorized into three main types: <\/p>\n\n\n\n

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  1. Ineligible Applicants <\/li>\n<\/ol>\n\n\n\n

    Foreign service firms, such as foreign-owned accounting or law firms, are not eligible for foreign company income rate applications.  <\/p>\n\n\n\n

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    1. Nature of Transactions Errors <\/li>\n<\/ol>\n\n\n\n

      The second category of errors involves the nature of the transactions. While technical services are typically eligible for applications, transactions related to the authorization of intangible assets, such as various rights, confidential methods, specialized knowledge, or customer data, do not fall under the category of technical services. <\/p>\n\n\n\n

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      1. Failure to Reapply for Approval <\/li>\n<\/ol>\n\n\n\n

        Common scenarios include contracts reaching their expiration date and the desire to extend them. In such cases, reapplication is necessary to secure approval for the extended period. Another situation arises when changes occur in the contract’s content, particularly if the modified scope of business exceeds the initially approved content, necessitating a reapplication to comply with the regulations. <\/p>\n\n\n\n

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        What can PREMIA TNC Help you? <\/h3>\n\n\n\n

        PREMIA TNC<\/a> provide comprehensive tax services, which encompass free tax consultation services and support for tax benefit applications with the National Tax Bureau<\/a>. Our professional consultants manage every step of the procedure, saving you time and guaranteeing a more seamless application process. All the inquiry from the National Tax Bureau will be well communicated and supplementary documents will be properly reviewed before the submission. Your inquiries are our priority, and we’re here to answer any questions you may have! Feel free to contact us now! <\/p>\n\n\n\n

        Conclusion  <\/h3>\n\n\n\n

        Article 25 not only serves as a regulatory cornerstone but also a testament to Taiwan’s commitment to fair and equitable taxation. It provides a framework for foreign companies to navigate the complexities of taxation within Taiwan while fostering an environment conducive to international business collaboration. In doing so, it upholds the principles of tax fairness and economic vitality, contributing to the continued growth and prosperity of Taiwan. <\/p>\n\n\n\n

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        Your Hassle-Free Taxation Solution!<\/a><\/div>\n<\/div>\n\n\n\n
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        FAQ<\/h2>\n\n\n\n
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        Q1: Who is eligible to apply for a lower withholding tax rate under Article 25 of the income tax?<\/h3>\n\t\t\t\t\t
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        A1: Foreign companies with their head office outside Taiwan, engaged in international transport, construction contracting, technical services, or machinery and equipment leasing, and find it difficult to calculate their costs and expenses are eligible to apply. <\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t

        Q2: How is the assessable income calculated for international transport and other businesses under Article 25 of the income tax?<\/h3>\n\t\t\t\t\t
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        A2: The assessable income for international transport is determined at 10% of the operating revenue within Taiwan. For construction contracting, technical services, and machinery and equipment leasing, they are calculated at 15% of the operating revenue within Taiwan. <\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t

        Q3: What is the withholding tax rate for foreign companies when obtaining approval for technical services under Article 25 of the income tax?<\/h3>\n\t\t\t\t\t
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        A3: Foreign companies that obtain approval for technical services under Article 25 of the income tax can significantly reduce their withholding tax rate from 20% to 3%. <\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\n\n\n\n

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        <\/span> 4<\/span> minutes<\/span><\/span>In the current global business environment with frequent transactions and intense competition in pricing, enterprises must carefully calculate the related costs incurred in their dealings. According to the current tax regulations, foreign companies without a fixed place of business in Taiwan are subject to a withholding tax rate of up to 20% on income earned from services provided in Taiwan. In practice, the income withholding tax that should be borne by foreign companies is often shifted to Taiwanese companies during business negotiations, thereby increasing the transaction costs between Taiwanese companies and foreign companies. <\/p>\n","protected":false},"author":2,"featured_media":90749,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","content-type":"","footnotes":""},"categories":[133,136],"tags":[],"class_list":["post-90746","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blogging","category-taxation-2"],"featured_image_src":"https:\/\/premiatnc.com\/tw\/wp-content\/uploads\/2023\/11\/Taiwan-technical-service-tax-refund.jpg","author_info":{"display_name":"premiatnc","author_link":"https:\/\/premiatnc.com\/tw\/author\/premiatnc\/"},"yoast_head":"\nTaiwan Technical Service Tax Refund | Discover the Benefits<\/title>\n<meta name=\"description\" content=\"Are you seeking guidance on Taiwan Technical Service Tax Refunds? 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