The Ministry of Finance states that the "Agreement between the Government of the Republic of China (Taiwan) and the Government of Tuvalu for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income" (hereinafter referred to as the "Taiwan-Tuvalu Income Tax Agreement"), which was signed in Tuvalu on March 4, 2026, entered into force on June 11, 2026 after both sides completed their domestic law requirements and notified each other. It will become effective from January 1, 2027, making it the 36th comprehensive Income Tax Agreement for Taiwan. With respect to taxes withheld at source, it shall apply to income payable on or after January 1, 2027; with respect to other taxes, it shall apply to income for taxable periods beginning on or after January 1, 2027.
The Ministry of Finance elaborates that the Taiwan-Tuvalu Income Tax Agreement consists of 29 articles, providing appropriate tax reductions or exemptions and tax administrative cooperation mechanisms (see Appendix). These include a reduced withholding tax rate of 10% on dividends, interest, and royalties, as well as tax exemptions for business profits or income from independent personal services that meet specific conditions. Furthermore, interest sourced in a Contracting State derived by the government of the other Contracting State, or any agencies owned or controlled by that government shall be exempt from tax in the first-mentioned State.
The Ministry of Finance further illustrates that the Taiwan-Tuvalu Income Tax Agreement stipulates provisions for a Mutual Agreement Procedure. When residents of either side consider that disputes regarding the application of the Agreement have occurred or will occur, they may request that the competent authorities of both sides consult with each other for resolution. This could enhance tax certainty and would also be conducive to bilateral industrial and technological exchanges and cooperation.
The Ministry of Finance emphasizes that it will continue, based on the principles of reciprocity, to promote the conclusion of Income Tax Agreements with countries sharing common goals, in order to provide more comprehensive tax benefits and protection for Taiwanese enterprises in their global investment.
Appendix: Table of the highlights in the Taiwan-Tuvalu Income Tax Agreement:
| Scope
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Persons Covered
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Residents, as defined in accordance with domestic tax laws of either Taiwan or Tuvalu, including individuals and enterprises.
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| Taxes Covered
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Income tax.
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| Key measures of tax exemption or reduction
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Business Profits
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If an enterprise of either Taiwan or Tuvalu carries on business in the other Contracting State without constituting a permanent establishment (hereinafter referred to as “PE”) therein, business profits of that enterprise are exempted from taxation in that other Contracting State.
The term PE includes:
1. Physical PE: e.g., a place of management, a branch, or an office.
2. Project PE: a site or project that continues to exist for a period of more than six months.
3. Service PE: the furnishing of services for a period or periods exceeding more than six months in any twelve-month period.
4. Agency PE: a person acting on behalf of an enterprise of a Contracting State and habitually exercising an authority to conclude contracts in the name of that enterprise in the other Contracting State.
However, an enterprise shall be deemed as having no PE if its maintenance of a fixed place of business (e.g., logistic warehouse) in the other Contracting State is solely for the purposes of storage, display, or delivery of goods or merchandise, for purchasing goods or merchandise, or for collecting information, etc. as long as these activities are of a preparatory or auxiliary character.
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| Income from Investment
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Dividends: the tax charged is not to exceed 10% of the gross amount of the dividends.
Interest: the tax charged is not to exceed 10% of the gross amount of the interest; certain interest is exempted from taxation.
Royalties: the tax charged is not to exceed 10% of the gross amount of the royalties.
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| Capital Gains
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Gains derived from the alienation of shares shall be taxable only in the Contracting State of which the alienator is a resident. However, if more than 50% of the value of such shares is derived directly or indirectly from immovable property situated in the other Contracting State, that other Contracting State may tax such gains.
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| Dispute Resolution
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Mutual Agreement Procedure
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Residents of either territory may, within the stipulated timeframe, present their cases to the competent authority with respect to their residence and request the mutual agreement procedure in order to prevent or resolve disputes resulting from cross-border taxation.
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Notes:
1. Download the Chinese and English texts of the Taiwan-Tuvalu Income Tax Agreement, or visit the Ministry of Finance website (www.mof.gov.tw) > Home> Core Business> International Fiscal Affairs> Income Tax Agreements.
2. To understand the procedure of applying for and reviewing a tax agreement case, please refer to the above point for V. Relevant Laws and Regulations> Regulations Governing Application of Agreements for the Avoidance of Double Taxation with Respect to Taxes on Income.
3. To download relevant forms, please also refer to the first point for VI. Application for Income Tax Agreements.
Contact person: Ms. Lin, Tian-Cin, Section Chief.
Contact Number: +886-2-23228150