Viewpoints from Kaizen

Comparison of Major Taxes in Taiwan and Mainland China No. Taiwan Mainland 1 Profit-seeking Enterprise Income Tax: § Basic tax rate is 20% § The tax rate is 12% after the implementation of Income Basic Tax Act (thereafter [Alternative Minimum Tax]). § For a profit-seeking enterprise with independent legal personality, while the current year’s surplus is not distributed in the following year, an additional 5% profit-seeking enterprise income tax is required § Loss carrying forward period is 10 years Enterprise Income Tax §  Basic tax rate is 25% §  Preferential tax rate for high-tech enterprises: 15% §  Preferential tax rate for small low-profit enterprises: 10%, 5% §  No tax regulations for undistributed surplus §  Loss carrying forward period is 10 years 2 Value-added and Non-value-added Business Tax: Scope of Taxation: § In /into Taiwan –     Sales of goods –     Sales of services, including sales of [electricity labor] –     Import of […]

  Tax Differences Between Setting Up a Branch and a Subsidiary in Taiwan   For a foreign entity that is seeking to do business in Taiwan, a branch and a subsidiary are two commonly utilized methods. From an accounting perspective, a branch is equivalent to an extension of the parent organization and maintains its accounts jointly with the parent. The parent company is fully liable for the branch’s liabilities and legal claims. In comparison, a subsidiary is a separate corporate entity set up by the holding company. It maintains a separate set of books and its liabilities and legal claims cannot be passed on to the parent. When a foreign corporation expands its business in Taiwan, it usually involves in trading of common products, warehouse registration, manufacturing for domestic sale or export sale, or further invest in other business entities in exchange for shares.   Which is the most tax-efficient […]

Introduction to Individual Income Tax in Taiwan   Individual Income Tax (IIT) in Taiwan, it is levied on incomes generated by individuals that income sourced from Taiwan. Tax residence and non-tax residence had been introduced to difference tax rates, Tax Residence calculate their tax payable for the year in accordance to progressive tax rate, however non-tax residence will be tax at a different rate accordance to the Income Tax Act.   Tax Basis   IIT is residence-based income tax levy, which is, when a person had been determined as taxable person in Taiwan, the worldwide income which they had been obtained in the year is subjected to be taxable. The above situation will be varied due to the situation involved in each tax residence: – (1)     Taiwan citizens which had earning (e.g employment incomes) from the Peoples Republic of China (China) would obtain tax rebate if the taxpayer had pay […]

Guide to Taiwan Profit-Seeking Enterprise Income Tax   Introduction   The Profit-seeking Enterprise Income Tax is the income tax levied by the Taiwan government on the surplus of Taiwan’s profit-seeking enterprise, and the nature of it is similar to Enterprise Income Tax in China. The taxpayers includes corporate legal persons, and sole proprietorship, partnership, company (including a Taiwan branch of a foreign company), and any other form of organization that operates for profit-seeking purposes through a fixed place of business, regardless of whether the enterprise is owned by the government, private sector, or jointly by the government and the private sector. The taxable income of profit-seeking enterprise is the net income after deducting various expenditures, losses and taxes from their total income.   Tax Base and Tax Rate   A profit-seeking enterprise in the form of a sole proprietorship, partnership, or company (including a subsidiary that is wholly owned by […]

Guide to Taiwan Business Tax Introduction   Taiwan implemented the business tax, which levied on value added in 1986. The scope of taxation includes the sales of goods, services and import of goods. The tax base is the balance of its total revenue minus capital equipment and non-capital expenditures in every month or every two months. Business tax rate divided into two types, the general tax calculation business entities and special tax calculation business entities. The former refers to the business entities who are taxed on value added tax, and the latter refers to the business entities who are taxed on the total amount of revenue.   Scope of Taxation   Pursuant to the Value-added and Non-value-added Business Tax Act (Business Tax Act or BTA), the sale of goods and the provision of services in Taiwan, as well as the import of goods into Taiwan, are subjected to business tax. […]