On May 2, 2024, Taiwan’s Executive Yuan passed amendments to the Income Tax Act (Act), proposed by Taiwan’s Ministry of Finance, to improve the withholding system. The proposed amendments will be further discussed by Taiwan’s Legislative Yuan. The following are the main points of the proposed amendments:
- A public body incorporated under public law and a trustee of a trust who manages and disposes of the trust property should withhold tax on the income paid, whereas a trustee of a trust should withhold tax on the salaries paid by the trustee to a resident of Taiwan and on the income paid by the trustee to a foreign company that does not have a fixed place of business or a business agent in Taiwan.
- The withholding taxpayer will be changed from the representative to the company when the company distributes dividends or surplus to a shareholder who resides outside Taiwan, whereas the withholding taxpayer will be changed from the representative of a government agency, a public body incorporated under public law, an unincorporated association, a school, or a company to the government agency, the public body, the unincorporated association, the school, or the company when it pays salaries to a resident of Taiwan or pays income to a foreign company that does not have a fixed place of business or a business agent in Taiwan.
- The penalty system will be changed from a “fixed rate penalty based on the amount of withholding tax” system to a “penalty based on the upper and lower limits of a fine” system.
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