According to the Act, a foreign company engaged in international transport involving Taiwan, in construction contracting, providing technical services, or leasing machinery / equipment and the costs / expenses are difficult to calculate, regardless whether or not it has a branch office or business agent in Taiwan, may apply for approval to consider 10% or 15% of its total business revenue as its income derived within Taiwan. And the resulting gross withholding rate will become 2% or 3% (=assessed profit rate at 10% or 15% * regular withholding rate at 20%).
|Activities||Deemed Profit Rate (a)||Tax Rate (b)||Withholding Rate (c=a*b)|
|International transport involving Taiwan|
|Providing technical services|
|Leasing machinery / equipment|
To apply for the reduced 3% withholding rate,
|Organization||Business entity or NPO. Practitioners of professions, such as law firms, are excluded.|
|Nationality||Applicants from mainland China are excluded, and applicants from tax havens will be assessed carefully.|
|Permanent Establishment||Not relevant and regardless whether or not it has a branch office or business agent in Taiwan.|
|Business in Taiwan||Only international transport, construction contracting, providing technical services, or leasing machinery / equipment are included.|
|Royalties||If the payments for technical consulting services include royalties, the payments for royalties should be separated and excluded from the total technical consulting fee.|
|Technical Depth||No limitation.|
|Related-party Transaction||If the payer and payee are related in other ways, additional to the transaction itself, the pricing and necessity will be assessed carefully.|
|Cost Calculation||Having difficulty in calculating the project’s cost and profit according to the work done. In this circumstance, the taxpayer applies for the assessed profit rate at 10% or 15%, if the cost can be measured precisely, the taxpayer should be taxed according to the real profits based on real costs.|
|Deadline||The application should be submitted within 5 years after the payment takes place.|
The case will be submitted to the National Taxation Bureau of the area, and it generally takes 2-4 weeks to address the issues.
Usually only the contract will be assessed, and the evidence of service provision is not required.