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The Agreement between the Taipei Mission in Korea and the Korean Mission in Taipei for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income was signed

The Ministry of Finance states that the Agreement between the Taipei Mission in Korea and the Korean Mission in Taipei for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (hereinafter referred to as the Income Tax Agreement between Taiwan and Korea) was signed on November 17th, 2021. Each Party to the Agreement will notify the other in writing of the completion of the procedures necessary to implement this Agreement in their respective territories. The Agreement will enter into force on the date when the later Party’s notification is received and will apply to tax cases beginning on or after the first day of January after the year in which the Agreement enters into force.

 

The Ministry of Finance points out that the Income Tax Agreement between Taiwan and Korea has been promoted and consulted by both sides for years before a consensus was reached. This Agreement was entered into with reference to international model tax conventions. Its main objective is to ensure that the income derived by the residents (including people and enterprises) of a Party is subject to tax in the other Party with a proper measure to the reduction of or exemption from that other Party’s taxation in order to eliminate double taxation. With such an Agreement in place, it may reduce the tax burden of people and enterprises from both sides, provide a mechanism for dispute resolution, and enhance other areas of tax cooperation.

 

The Ministry of Finance notes that Taiwan and Korea has a close economic and trade relationship. In 2020, the bilateral trade between Taiwan and Korea amounted to US$35.74 billion. Taiwan and Korea have become each other’s 5th largest trading partner. As of the end of July of 2021, Taiwanese enterprises invested a total amount of approximately US$2.04 billion in Korea, and Korean enterprises invested a total amount of approximately US$1.51 billion in Taiwan. The appropriate measures for tax reduction or exemption provided by the Income Tax Agreement between Taiwan and Korea will promote industrial cooperation and technical exchanges, boost the competitiveness of enterprises from both sides, create employment opportunities, enhance economic growth so as to benefit both sides in a reciprocal way, and create win-win situations.

 

The Income Tax Agreement between Taiwan and Korea is the 2nd Income Tax Agreement that Taiwan concluded with Northeast Asian countries after Japan. The signing and entry into force of this Agreement will strengthen the treaty network of Taiwan in Northeast Asia, which can help Taiwan conclude Income Tax Agreements with other countries in the future and improve its international competitiveness. The Ministry of Finance will, based on the principles of equality and reciprocity, continue to initiate the conclusion of Income Tax Agreements with countries with close economic and trade relationships so as to broaden our tax treaty network as well as create a fair, stable, and reasonable tax environment.

 

Contact person: Mr. Kevin Pao, Section Chief.
Contact Number: +886-2-23228150

Issued:Dept. of International Fiscal Affairs Release date:2021-11-30 Last updated:2021-11-30 Click times:461