Tax System

Corporate income tax

Taiwan has a business income tax system named “Profit-seeking Enterprise Income Tax”, including:

  1. Corporate Income Tax
  2. Withholding tax on dividends
  3. Tax on undistributed profit
Coverage and tax rates
NO
Item
Coverage
Tax Rate
1Corporate Income TaxBusiness profits of current year20%
2Withholding tax on dividendsDistributed profits from last year's profit21%
3Tax on undistributed profitUndistributed profits from last year's profit5%
Example
ItemCalculationAmount
Sales Revenue200,000
-) Cost of Goods Sold-120,000
=) Gross Margin80,000
-) Operating Expenses-10,000
=) Earnings before Tax(a)70,000
-) Corporate Income Tax 20%( b= a*20%)-14,000
=) Earnings after Tax (i.e., distributable profits)(c=a-b)56,000
-) Dividends to foreign parent company(d)-30,000
=) Undistributed profit(e=c-d)26,000
Withholding Tax on Dividends 21%( f=d*21%)-6,300
Tax on undistributed profit 5%(g=e*5%)-1,300
Time to file for the return

The corporate income tax return is calculated annually in May.

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