Taiwan has a business income tax system named “Profit-seeking Enterprise Income Tax”, including:
- Corporate Income Tax
- Withholding tax on dividends
- Tax on undistributed profit
Coverage and tax rates
| NO | Item | Coverage | Tax Rate |
|---|---|---|---|
| 1 | Corporate Income Tax | Business profits of current year | 20% |
| 2 | Withholding tax on dividends | Distributed profits from last year's profit | 21% |
| 3 | Tax on undistributed profit | Undistributed profits from last year's profit | 5% |
Example
| Item | Calculation | Amount |
|---|---|---|
| Sales Revenue | 200,000 | |
| -) Cost of Goods Sold | -120,000 | |
| =) Gross Margin | 80,000 | |
| -) 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.