The National Taxation Bureau of the Northern Area, Ministry of Finance (NTBNA, MOF), stated that, in line with Taiwan’s current industrial development policies and the national net-zero carbon emissions strategy, as well as to align with international anti-tax avoidance trends and promote tax fairness, the Ministry of Finance and the Ministry of Economic Affairs (MOEA) jointly promulgated the amended Directions Governing Reviews of Applications for Exemption from Income Tax on Royalty and Technical Service Fees Collected by Foreign Profit-Seeking Enterprises from Manufacturing Industries, Technical Service Industries and Power-Generating Industries on May 13, 2026. The amended Directions took effect on the date of promulgation.

The Bureau explained that the amendments primarily cover adjustments to the scope of eligible industries, measures to prevent double non-taxation, clarification of the application deadlines, and the introduction of the applicable tax exemption period. The key amendments are summarized as follows:
1. Expansion of the Scope of Eligible Industries:
To align with the government’s key industrial development policies, the hydrogen fuel cell industry, aviation and unmanned aerial vehicle (UAV) industry, and shipbuilding industry have been added to the scope of eligible industries. Meanwhile, the smart living and the information services industries have been removed from the list of eligible industries.
2. Introduction of Restrictions on Low-Tax Jurisdictions:
To prevent situations of double non-taxation between Taiwan and the country or jurisdiction in which a foreign profit-seeking enterprise is resident, a foreign profit-seeking enterprise shall not be eligible to apply for the income tax exemption if, under the laws of its country or jurisdiction of residence, the statutory income tax rate applicable to the relevant royalty income or technical service fees is less than 15%.
3. Clarification of the Application Deadline:
(1) Timing for Filing an Application with the Competent Industry Authority:
An application shall be submitted to the Industrial Development Administration or the Energy Administration of the Ministry of Economic Affairs before the agreement becomes effective after execution or during the term of the agreement.
(2) Timing for Filing an Application with the Competent Tax Authority:
Where the application referred to in the preceding subparagraph has been approved, the applicant shall, within two months from the day following the date of issuance of the approval letter, submit the required supporting documents to the competent tax authority to apply for the income tax exemption.
4. Clarification of the Applicable Tax Exemption Period:
The approved tax exemption period shall be three years, commencing from the date on which the application is filed with the Industrial Development Administration or the Energy Administration of the Ministry of Economic Affairs. Where the application is filed before the agreement becomes effective after execution, the three-year tax exemption period shall commence from the effective date of the agreement and shall not extend beyond the term of the agreement. Where the approved authorization period or the plant construction period is shorter, the tax exemption period shall be limited to such shorter period.

The Bureau would like to remind foreign profit-seeking enterprises applying for the income tax exemption under the aforementioned Directions that they should pay particular attention to the provision that an application for the tax exemption shall not be permitted if the statutory income tax rate in the country or jurisdiction where the foreign profit-seeking enterprise is resident is less than 15%. Applicants should also submit their applications to the competent industry authority and the competent tax authority within the prescribed application deadlines in order to satisfy the applicable procedural requirements. If you have any questions, please visit the NTBNA website  to learn about the relevant laws, or call the toll-free service number 0800-000321 for detailed consultation services.

〔Contact person:Ms. Chen, Section Head of Profit-Seeking Enterprise Division.; Tel:(03)3396789, ext. 1340〕