The Ministry of Finance states that for the purpose of clarity on Taiwan’s application process of relevant cases under its income tax treaties and to ensure that the procedures meet the requirements of tax collection practices, it promulgated amendments to the Regulations Governing Application of Agreements for the Avoidance of Double Taxation with Respect to Taxes on Income (hereinafter referred to as “these Regulations”) on August 12, 2021, among which the relevant measures concerning the application for the issuance of Taiwan’s Certificate of Resident under Article 38 have been amended. The said amendment simplifies the procedures for confirmation of identities of Taiwan’s residents for applying for tax reductions or exemptions from treaty partners, so as to increase the ease in treaty application.
The Ministry of Finance explains that with the increase in the number of income tax treaties that have come into effect in recent years, there have been frequent reports from Taiwan’s residents that when they apply for tax reductions or exemptions from certain countries (e.g., Indonesia, the United Kingdom, France, and Germany), those countries request the use of prescribed forms for the confirmation of their residency status. In order to provide the necessary assistance, Paragraph 2 of Article 38 of these Regulations has been added to set out that the tax collection authorities may directly sign and seal the aforesaid prescribed forms to confirm the residency status of Taiwan’s residents for treaty partners, thereby facilitating Taiwan’s residents in applying for a treaty’s tax reductions or exemptions.
The Ministry of Finance also indicates that in order to assist Taiwan’s mutual trust funds and securities investment trust funds in applying for tax reductions or exemptions from treaty partners, Paragraphs 3 to 5 of Article 38 of these Regulations have made reference to Decree No. 10600686840 issued on March 6, 2018 by the Ministry of Finance to remove the trust enterprises and securities investment trust enterprises of the aforesaid funds from the complicated process of obtaining authorization from each respective fund beneficiary based on the trust contracts which specifying that they have been authorized to handle tax matters in relation to the funds’ investment. In this regard, a trust enterprise or a securities investment trust enterprise may provide a statement specifying the proportion of the units held by Taiwan’s residents according to the relevant documents to the district tax collection authority for applying for the issuance of a Certificate of Residence which demonstrates “the proportion of the units with beneficial rights issued by the fund which are held by the beneficiaries that are Taiwan’s residents” Such amendment simplifies the procedures for trust funds to apply for evidential documents required to apply for a treaty, and facilitates trust funds to claim a treaty’s tax reductions or exemptions on their foreign-sourced investment income, which would consequently increase their net asset value (NAV) and enhance their attractiveness as well as overall competitiveness.
The Ministry of Finance emphasizes that it will continue to refine the application process for treaties and to streamline their procedures. Taxpayers engaging in cross-border activities are advised to take note of Taiwan’s 34 income tax treaties that have taken effect and to apply them, where appropriate, to eliminate double taxation and strengthen international competitiveness.
Contact person: Mr. Kevin Pao, Section Chief.
Contact Number: +886-2-23228150