- In 2018, the standard deduction, the special deduction for wage income, and the special deduction for the disabled were significantly increased, with increases of from 33% to 56% to relieve the tax burden on middle- and low-income earners and wage earners and improve the distribution of income.
- The amount of the special deduction for pre-school children of individual income tax was significantly raised per child per year to NT$120,000 from 2018 to relieve the tax burden on middle- and low-income earners who have children.
- From 2019 the means to calculate wage income is based on a lump‐sum deduction or an itemized expense deduction, including vocational clothing expenses, upgrading training expenses, and vocational tool expenses, with an upper limit of 3% of the wage income for each. The taxpayer can choose the best option.
- In order to make effective use of government resources and relieve the tax burden on households with disabled individuals, from 2019, the taxpayer, his/her spouse, or any dependent who has a physical or mental disability and requires long-term care services as announced by the Ministry of Health and Welfare, is entitled to the special deduction of NT$120,000 for long-term care per person per year.
- To prevent speculators from hoarding houses and to impose tax fairly, the tax burden of holding a house used for non-residential purposes is properly raised. Article 5 of the House Tax Act is revised as follows: for a house used for residential purposes by the owner or leased for public welfare purposes by a landlord registered with the local government as a charity, the tax rate shall be 1.2 %; for the house used for residential purposes, which is not occupied by the owner, the rate is raised to the interval between 1.5% and 3.6 % from the interval between 1.2% and 2%, and provisions are added so that the local government may stipulate different rates based on the number of houses a person owns; for operating a private hospital, a private clinic or a professional office, the rate is raised to the interval between 3% and 5% from the interval between 1.5% and 2.5%.
- The amendments to Subparagraph 9, Paragraph 1, Article 7 of the Vehicle License Tax Act were promulgated on December 6, 2017. Each social welfare institution or organization is now allowed to have more than three vehicles exempted from the vehicle license tax for those vehicles with fixed assisting equipment to carry disabled persons and those who need long-term care, as well as a particular sign showing exclusive use by social welfare institutions or organizations which have an identification document issued by the social welfare authorities and authorized by the municipal or county (city) government.
- In order to fulfill the transportation needs of the physically disabled, Paragraph 5, Article 12 of the Commodity Tax Act amended on December 25, 2019 allows the exemption period for the commodity tax on wheelchair accessible vehicles which conform to the Vehicle Safety Test Standard and were newly purchased as well as registered to be extended to December 31, 2024.
- The house and land transactions income tax system was implemented in 2016, and the taxation on real estate in the Specifically Selected Goods and Services Tax Act was suspended at the same time. The resultant income tax revenues are used for expenditures on housing policy and long-term social care services to preserve housing justice, narrow the wealth gap, and allocate social resources rationally. Furthermore, the house and land transactions income tax system 2.0 was implemented on July 1, 2021, extending the holding period of short-term house and land transactions where higher tax rates are applied, while also availing the original tax system of some refinements, so as to curb short-term speculation on real estate, build a sound property market, and maintain fair taxation.
- In order to prevent high-income individuals from utilizing donations of non-cash property for their tax planning, to maintain taxation justice and to conform with the principle of taxation by law as provided by Article 19 of the Constitution, the MOF amended Article 17-4 of the Income Tax Act concerning itemized deductions for non-cash property donations, which came into force on August 1, 2016.
- Article 15 of the Long-Term Care Service Act stipulates that the tax revenues from raising the estate and gift tax rates and tobacco and alcohol tax amounts as sources will be allocated to the long-term care service development fund. To help the sustained development of the long-term care system, Articles 7, 20, and 20-1 of the Tobacco and Alcohol Tax Act and amendments to the Estate and Gift Tax Act were promulgated on May 10, 2017, raising the Tobacco and Alcohol Tax amount of tobacco products from NT$590 to NT$1,590 per thousand sticks (per kilogram), and adjusting the estate tax and gift tax from a single flat tax rate of 10% to progressive tax rates of 10%, 15%, and 20%.
- The Taxpayer Rights Protection Act was enacted on December 28, 2016, and implemented on December 28, 2017, to ensure taxpayers' rights, to safeguard people's basic right to exist, to achieve tax equity, and to maintain due process of law. The important points of the Taxpayer Rights Protection Act include ensuring the expense for basic living shall not be taxed, strengthening due process of law, ensuring fair and reasonable tax, setting up a taxpayer rights protection organization, and strengthening the taxpayers' administrative relief.
- Article 3 and 11 of the Enforcement Rules of the Taxpayer Rights Protection Act have been amended. From January 1, 2018, taxpayer’s basic living expenses are reflected in the revised amounts for the exemption, standard deductions (or itemized deductions), special deduction for savings & investment, and special deduction for disability, special deduction for pre-school children. In the case that the taxpayer’s basic living expenses exceeds the total amount of the above-mentioned deductions (ie, the difference in basic living expenses), the difference may be deducted from the total amount of comprehensive income to protect the people’s right to life.
- Articles 12 and 18 of the Income Basic Tax Act have been amended. In order to uphold tax equity, to ensure tax revenue for the country, to establish the basic requirements of individuals in regard to their obligation to fulfill their income tax burden as a contribution to public finance, and to restrain improper tax evasion or reduction arising from the cessation of the income tax on gains derived from securities transactions, the MOF put transaction income from securities not listed on the stock exchange or traded on over-the-counter markets into the amount of basic income of an individual, which comes into force on January 1, 2021. Besides, to cooperate with the policy of industrial innovation, income derived from securities issued by companies that have been identified by the central authority in charge of relevant enterprises as high-risk innovative startups is excluded.
- To comply with the Judicial Yuan Interpretation No. 779 and to achieve tax fairness and rationalize the tax system, partial articles of the Land Tax Act were amended and promulgated on June 23, 2021, stipulating that the transfer of non-urban land for use for public facilities but not yet requisitioned is exempted from the land value increment tax.
- By taking into account the rights of taxpayers and to safeguard national taxation obligations, the partial articles of the Tax Collection Act were amended and promulgated on December 17, 2021, lowering the rate of belated surcharge, prescribing the situation when the assessment period has not been completed, strengthening Tax Safeguards measures, extending the enforcement period by 10 years for cases in which the unsettled tax arrears have been transferred before March 5, 2007, amending the period of the refund of overpaid tax due to errors, adding the installment payment method for interest surcharge, reducing the proportion of the amount of tax payable after the recheck for deferral of the compulsory execution, and increasing the tax related penal punishment.
- To prevent any individual from establishing a controlled foreign company (CFC) in a low-tax jurisdiction to retain earnings in the CFC for tax avoidance, Article 12-1 of the Income Basic Tax Act was promulgated to set the CFC rules for individuals on May 10, 2017. Our Executive Yuan designated that the aforementioned CFC rules shall be enforced from January 1, 2023.
II. Profit-Seeking Enterprise
- The announcement lifted the restrictions on the application of the export tax refund threshold effectively assists the industry to lower the threshold for receiving orders and enhance export competitiveness.
- The tax rate of the profit-seeking enterprise income was raised from 17% to 20% from 2018. However, in consideration of low-profit profit-seeking enterprises, those with a taxable income of not more than NT$500,000 are subject to annual adjustments with a tax rate of 18% for the taxable year 2018, a tax rate of 19% for the taxable year 2019, and a 20% rate for the taxable year 2020 and after.
- The MOF reduced the surtax rate on undistributed earnings of companies from 10% to 5% from 2018. By reducing the income tax burden of companies that must accumulate their own capital by retaining their surplus, companies having difficulty fund-raising or small and medium-sized startups can accumulate investment momentum into future transformation and upgrading.
- From 2018, a profit-seeking enterprise organized as a sole proprietorship or a partnership shall be exempt from computing and making a profit-seeking enterprise income tax payment. The profit-seeking enterprise income shall be incorporated into its sole proprietor’s or partners’ “Business Income” and be levied as individual income tax.
- The MOF abolished the partial imputation tax system on dividends and deleted the rule that profit-seeking enterprises shall set up an imputation credit account, calculate, and record the amount in the said accounts as well as related penalties starting on January 1, 2018, simplifying the tax system.
- The VAT system for foreign companies selling cross-border electronic services entered into force on May 1, 2017. From that day, foreign companies selling cross-border electronic services to domestic individual consumers shall register and pay VAT in our country to ensure tax sources and maintain tax fairness. From 2017, the income derived from foreign suppliers selling cross-border electronic services to domestic purchasers via the internet or other electronic ways shall be subject to taxation in accordance with the relevant regulations. The abovementioned measures complete the tax declaration and payment mechanism for foreign suppliers selling cross-border electronic services, control tax sources, and maintain the fairness of taxation.
- In order to prevent legitimate domestic businesses suffering disadvantages of unfair market competition arising from importers’ abusing the Low Value Consignment Relief (LVCR) by splitting a declaration over a long period of time, the “Principles of Identifying Frequent Importations”, which stipulates that the frequently imported low-value consignments whose frequency of importation exceeds six times every half a year are prohibited from applying for the LVCR, was announced on May 26, 2016 and took effect on July 1, 2017.
- To balance the duty and tax burden imposed on domestic and foreign businesses and to provide a fair environment of competition for domestic and foreign businesses, the threshold of the LVCR has been reduced from NT$3,000 to NT$2,000, which took effect on January 1, 2018.
- The house and land transactions income tax system was implemented in 2016, and the taxation on real estate in the Specifically Selected Goods and Services Tax Act was suspended at the same time. The resultant income tax revenues are used for expenditures on housing policy and long-term social care services to preserve housing justice, narrow the wealth gap, and allocate social resources rationally. In order to curb short-term real estate speculation, to preserve housing justice, to curb tax avoidance, and to maintain tax fairness, the house and land transactions income tax system 2.0 was implemented on July 1, 2021, amending the applicable tax rates for the income derived from transactions of house and land incurred by a profit-seeking enterprise according to the holding period of the transferred house and land, regarding transactions of presale houses, qualified shares or capital as real estate transactions, and availing the original tax system of some refinements. These policies will help to curb short-term speculation, and to improve the development of the real estate transaction market.
- By taking into account the rights of taxpayers and to safeguard national taxation obligations, the partial articles of the Tax Collection Act were amended and promulgated on December 17, 2021, lowering the rate of belated surcharge, prescribing the situation when the assessment period has not been completed, strengthening Tax Safeguards measures, extending the enforcement period by 10 years for cases in which the unsettled tax arrears have been transferred before March 5, 2007, amending the period of the refund of overpaid tax due to errors, adding the installment payment method for interest surcharge, reducing the proportion of the amount of tax payable after the recheck for deferral of the compulsory execution, and increasing the tax related penal punishment, amending the fines incases which the enterprise fails to provide, obtain, or keep certificates as required by the law.
- To prevent any multinational enterprise from establishing a CFC in a low-tax jurisdiction to retain earnings in the CFC for tax avoidance, Article 43-3 of the Income Tax Act was promulgated to set the CFC rules for enterprises on July 27, 2016. Our Executive Yuan designated that the aforementioned CFC rules shall be enforced from the 2023 tax year.
- The amendments to Regulations Governing Taxation Registration were promulgated on August 8, 2022. From January 1, 2023, the business entity which sells goods and services via internet not only is required to register “the domain name and the IP address” and “the member account” but also should reveal its profit-seeking enterprise uniform serial number and its name clearly on the online sales page and relevant application. The above-mentioned measures make the transaction information more transparent to protect consumers and ensure the accuracy and completeness of the taxation registration data.
- The amendments to The Regulations Governing the Account Books and Vouchers of Profit-Seeking Enterprises Managed by the Competent Tax Authorities were promulgated on August 8, 2022. From January 1, 2023, business entities that provide one or more online platforms for others to sell goods and services have the obligation to cooperate with keeping and providing the transaction records.
III.Synergistically stabilizing prices
- Reducing import tariff on commodities and oils flexibly and temporarily to stabilize prices.
- Implement flexible exemption from business tax on imported wheat, barley, corn soybean and bulk commodities to reduce inflationary pressures and the burden on consumers.
- Flexibly reduce the commodity tax amount on cement, and oil, to temporarily relieve inflationary pressures and burden on the nation.
IV. Strengthen Tax Administration
- In order to promote the digitization of individual income tax deduction documents, the MOF has been proactive in providing deduction information to individual taxpayers. The number of taxpayers who utilized this measure was 5.77 million in 2023. On average, each taxpayer saved the equivalent of 33.15 sheets of paper receipts.
- In order to simplify the procedures for filing tax returns and to streamline the tax collection authority’s administration, a pre-calculation service was put into practice. The number of taxpayers who utilized this measure to complete their income tax returns was 1.51 million in 2023, with a ratio to total taxpayers of about 22.71%.
- The MOF promoted the policy of paperless issuance of various withholding and non-withholding tax statements for income tax in 2014, so as to reduce the consumption of paper, simplify tax administration, reduce the compliance cost on tax withholder and enhance tax administrative efficiency. Furthermore, in order to expand the scope of the paperless issuance of various withholding and non-withholding tax statements for income tax, a trial service measure was implemented in 2015 allowing profit-seeking enterprises, organizations or institutions, and professional practitioners to inquire about their income data online using their digital certificate. From January 1, 2019, the MOF further promoted a policy to simplify tax administration and provide more convenience for taxpayers. When withholding agents file withholding statements of resident individuals having income subject to separate taxation, such income can be included in the scope of the policy of paperless issuance of various withholding and non-withholding tax statements for income tax.
- From January 1, 2017, the MOF implemented the “Plan of Filing the Various Withholding Tax Statements for Non-residents via Internet.” In accordance with the Income Tax Act, the tax withholder who pays withholding income to non-residents and has paid the withholding tax within 10 days from the date of withholding may utilize the internet to file withholding tax statements, a measure which is both time-saving and convenient.
- In order to enhance simplified and convenient services, and promote the quality of tax service for administrative efficiency, from July 1, 2019, the platform service for non-residents’ designated tax service agent or custodian institution to check and download withholding tax statement information online was put into practice.
- From January 1, 2017, profit-seeking enterprises can file their account books to the collection authority-in-charge via the internet or other media. This enhances the electronic environment for profit-seeking enterprises, reduces audit compliance costs, and implements the paperless policy for a green environment.
- “The Regulations Governing the Account Books and Vouchers of Profit-Seeking Enterprises Managed by the Competent Tax Authorities” was amended. In 2019, when the competent tax authority conducts investigations, profit-seeking enterprises can submit their electronic files of account books and vouchers processed electronically and stored in a storage medium instead of printing out the files on paper to achieve energy conservation and carbon reduction, to simplify tax administration, and to provide more convenience for taxpayers. In 2021, the regulation was further relaxed. Public companies that process accounting data and store accounting books and vouchers electronically may be exempted from being reported to the competent tax authority for approval while conducting paper account books and vouchers destruction, so as to reduce their accounting processing operations, to save storage costs, and to provide more convenience.
- Since November 1, 2017, the Ministry of Finance has continually provided several online services, such as the issuance of payment certificates and tax bills of House Tax, Land Value Tax, Land Value Increment Tax, and Deed Tax; the issuance of payment certificate for Vehicle License Tax; the re-issuance of various Estate Tax and Gift Tax certificates within 5 years, individual income, personal property, and Individual Income Tax registration; and the re-issuance of Profit-seeking Enterprises Income Tax. The multiple channels of online service aim to make the application process for tax documents more efficient so that taxpayers may obtain eTax documents anytime, anywhere.
- In order to expand the online individual income tax filing system, the online tax filing system for Microsoft Windows users was launched in 2019, following the successful rollout for Mac users in 2018. Taxpayers can easily and conveniently file tax returns without downloading software. A total of 1.9 million cases were declared through online tax filing system in 2023.
- In order to provide diverse ways to file individual income tax, starting in May 2021, the MOF allows taxpayers to pay income tax using their mobile devices to identify themselves and log in to the mobile tax filing system. After confirming that their provided income, deductions, and tax payable are correct, taxpayers can easily pay their taxes (or apply for tax refund) and complete the declaration. In addition, as many people have no card-readers, Mobile ID Authentication has been added. After keying in the mobile phone number, National ID No. and NHI card number, and then verifying their identity through the telecommunications company, taxpayers can use the related tax filing system to download their income and deduction data and file tax return. From May 2022, the scope of mobile tax filing service has been expanded so that taxpayers can modify the data of dependents or income, and pay tax by mobile payment. In May 2023, the mobile tax filing service was further enhanced to include cash payments and the option to apply for tax payment deferment or installment. Additionally, a pilot program for attaching documents through the internet was introduced. In 2023, a total of 1.64 million cases were declared through mobile devices, with 130 thousand returns including attachments uploaded via the online system.
- Customs has been continuously promoting and refining the Authorized Economic Operator (AEO) certification and management system, so as to encourage the voluntary compliance of traders, facilitate the customs clearance of low-risk shipments, safeguard cargo security, and enhance the competitiveness of traders. As of the end of August 2023, there were 901 AEOs in Taiwan, including 492 general AEOs and 409 security and safety AEOs. These AEOs’ trade volumes accounted for approximately 49% of our total trade volumes.
- Customs adopted Radio Frequency Identification (RFID) e-seal system to control and monitor containers entering and exiting at container terminals in various port areas. There are approximate 50,000 transshipment containers which do not need to be escorted by customs officers. We saved about NT$30 million in operational cost of carriers and 87,000 hours of operational time annually.
- Customs established the “Customs-Port-Trade Single Window” for cross-border trade by integrating three existing IT systems, which were e-Customs, e-Trade, and e-Port, to form a one-stop service environment for traders. It also reduces the operation cost for traders by about NT$860 million per year.
- The “Advance Cargo Information System” aims to integrate the sea and air cargo clearance systems and to harmonize the data from Customs and licensing agencies by using WCO Data Model so that it lays a foundation for cross-border data exchange.
- The foreign travelers tax refund e-service, authorized downtown refund service and in-store small-amount VAT refund service have been provided to improve refund services for foreign travelers, strength our international competition, create value for the tourism industry, and increase job opportunities in related industries.
- The implementation of the “Paperless System on the Import/Export Declaration Document Review” will enable the declarants to transmit the relevant electronic files of the documents to be cleared to the Customs after receiving the approval notice. It is an environmentally-friendly and efficient initiative and can save time in customs clearance.
- Improve Filing Measures of Estate and Gift Tax
(1)In order to simplify procedures and offer public service for filing gift tax and estate tax, the MOF has promoted a cross-office/regional service for gift tax and estate tax filing from May 1, 2019 and December 1, 2019, respectively. For property gifts or estate that qualify for certain conditions, taxpayers can choose any branch office of the tax authorities to file their gift tax returns or estate tax returns; in other words, taxpayers won’t need to file their tax returns in the tax office of their household registration.
(2)For providing a more convenient tax-filing service, from March 17, 2021, the real estate ownership certificate will not be required to be submitted when filing the Estate Tax return, if the taxpayer can provide the Estate Tax Reference List and confirm that the information on that list is the same as the registration content on the day of the decedent's death.
(3)In order to simplify procedures of estate tax declaration, from September 1, 2021, the MOF further provided more effective one-stop service so that taxpayers can inquire and receive financial heritage information of the decedent from national taxation bureaus. From January 1, 2022, the MOF has integrated financial heritage information, real estate, automobiles and other information to provide the service for the pre-calculation of Estate Tax Returns(hereafter the pre-calculation service) for estates under certain conditions. For continuous progress, from July 1, 2022, the working period of the pre-calculation service has been shortened to 30 days, and the death certificate or the household registration cancellation transcript will not be required to be submitted if registration of death was completed. From August 1, 2022, cases in which the Veterans Affairs Council or National Property Administration is an estate administrator are applicable within the scope of the pre-calculation service.
18.Promoting mobile tax payment services
(1)With the addition of TW FidO authentication, individuals can apply to bind their mobile devices with citizen digital certificates, and use their mobile device to identify and log in to online inquiring system to pay tax during the vehicle license tax, house tax, and land value tax paying statutory period from November 2019.
(2)Since March 2022, in cooperation with the Ministry of the Interior to promote the natural person certificate and integrate the original “Taiwan Mobile Identification System (TW FidO)”, the old and new systems operated in parallel until July 15, 2022. After which, the mobile device must update the mobile natural person certificate APP, in order to use the originally provided local tax services, and inquire about the housing tax registration number, tax certificate, and other convenient services.
(3)In order to improve mobile and convenient tax payment services, the “Local Tax LINE Official Account” was established since October 1, 2022. After users bind their ID numbers, they can access services for querying and paying local taxes anytime, anywhere, and customize push messages to receive tax related information.
19.Promoting smart customer services
(1) With the aim of automation, mobilization, and intelligence, the 24-hour smart customer service of national tax was launched in May 2022, gradually onboarding services such as individual income tax, estate tax, gift tax, commodity tax, tobacco and alcohol tax, tax collection act, the Taxpayer Rights Protection Act, securities transactions tax, futures transactions tax, profit-seeking enterprise income tax, business tax, and electronic invoice to improve the quality of service for the general public.
(2) In order to improve the convenience of local tax consultation services, the 24-hour smart customer service of Local Tax was launched in October 2022, providing electronic declaration operations, land value-increment tax and deed tax, and gradually complete the other local tax consulting services by 2025.
- The MOF has upheld the concept of citizen-centered, data-sharing, and cross-ministerial cooperation led by the central government, integrating local tax and land authorities in 22 counties and cities. The MOF completed cross-departmental integration of resources and has provided one-stop services for national real estate transfer since 2021. Through an inter-agency interface, data is automatically loaded into the system, allowing citizens to access self-service real estate transfer operations through the Internet, check the progress of their applications at any time. This saves taxpayers from having to make trips to various government agencies to consult on relevant laws and regulations, collect documents, make inquiries, and track processing times, thereby enhancing government efficiency.
- To promote the interface of the automatic payment system of amusement tax by motion picture screening operators with the computerized box-office database of the Ministry of Culture, starting on August 1, 2018, operators can automatically import related application materials and complete the application for declaration and tax reduction or exemption by inputting their screening license number. This system will save time, reduce costs, simplify operations, and offer greater convenience.
- To promote diversified services of uniform invoice redemption, since January 1, 2019, the MOF created The Invoice Redemption APP, adding physical redemption sites such as First Bank, Chang Hwa Commercial Bank, Agricultural Bank of Taiwan, credit departments of farmers’ and fishermen’s associations, credit cooperatives, four convenience stores, PX mart, and Simple Mart to disburse the prizes instead of using the Post Office.
- In order to implement the authorization system for the customs declaration of express consignments, the measure of prohibiting the unauthorized import express consignments from customs declaration has been implemented since May 16, 2020, whereby Customs will not accept the simplified customs declaration filed by the consignees unless they have completed the registration of the Real-Name Authorization APP or they have submitted the paper-based letter of authorization has been submitted to the customs brokers. As of the end of August 2023, the number of registered real-name authorization was 5.76 million and the number of customs declarations completed with real-name certification accounted was over 129 million.
- The partial articles of the Tax Collection Act were amended and promulgated on December 17, 2021, adding Paragraph 4 of Article 19. If the circumstances of assessment of the tax is equal to the amount filed on tax return, the collection authority-in-charge could make public declaration of the tax assessments instead of issuing and serving a “Notice of Tax Assessment” separately, so as to save costs for both tax collection agency and taxpayers.
- One separate bill for each vehicle is incorporated into one bill for several but no more than five vehicles from July 1, 2023. Taxpayers file for the application of the aforementioned tax bill consolidation with the official vehicle registration department of the tax collection authorities under the municipal or county (city) government of taxation registration of vehicles. This taxation measure must be applied for at least two months before the vehicle license tax is to be collected.