萬國法律事務所

In view of the greater complexity of the new Income Tax Act, and the new taxation rules for the interest gained on the financial instruments specifically, the National Tax Administration (NTA) recently released some explanatory notes for the taxpayers to follow.

According to NTA, different rates for taxing the interest gained on the financial instruments would be implemented depending on the different classifications of taxpayers. The general rules can be described as follows: (i) interest income gained on financial instruments by individuals is subject to a separate 10% flat tax, and (ii) interest income derived from financial instruments owned by corporate entities is otherwise subject to the income tax rates designated for the profit-seeking enterprise.

The above rules took effect as of January 1, 2010 and must be declared by the beneficial owner of the interest within the subsequent tax payment term immediately following the year during which the interest is paid. The new rules would apply for instruments of short-term transactions, securitization, bond repo/resell transactions, structured notes and bills.