Deregulation regarding the requirement to submit the withholding tax statement from a Foreign Institutional Investor (FINI) when applying ex-post for the reduced tax rate in accordance with an income
The Ministry of Finance states that, in response to the policy of digitalization of the tax administration, the procedure for a FINI to provide the withholding tax statement when applying for the reduced tax rate in accordance with an income tax agreement has been greatly simplified. If the handling National Taxation Bureau can access and correct the original withholding information that was previously filed and stored in the tax information system, the requirement for a FINI to submit the withholding tax statement mentioned above may be lifted. This deregulation is also in line with the trend to reduce paper consumption and be more environmentally friendly.
The Ministry of Finance explains that according to Paragraph 1, Article 34 of the Regulations Governing Application of Agreements for the Avoidance of Double Taxation with Respect to Taxes on Income, in the case that the income derived by a resident of the other Contracting State subject to withholding tax under the Income Tax Act has already been taxed in accordance with the Standards of Withholding Rates for Various Incomes, the income recipient or tax withholders may, within a certain period, provide the relevant documents as well as the withholding tax statement, and apply to the National Taxation Bureau which originally handled the filed withholding tax cases for the reduction of or exemption from tax in accordance with an income tax agreement. The consideration for requiring the submission of the aforementioned withholding tax statement is that the content of the original withholding tax statement issued in accordance with Article 92 of the Income Tax Act will be outdated after the approval for the application to be taxed at the reduced tax rate in accordance with an income tax agreement. The original withholding tax statement, thus, needs to be returned to the issuing government agency to ensure the accuracy and exclusivity of the document circulating subsequently.
In order to provide more diverse filing methods for taxpayers and streamline the services provided to the public, the National Taxation Bureaus have opened up the online function for filing the withholding tax statement associated with a non-resident taxpayer’s case since 2017. Considering that the adoption of such e-filing approach also changes the viable method in terms of issuing the relevant approval document, if the handling National Taxation Bureau can access and correct from its tax information system the information for the year that the FINI is applying for the reduced tax rate in accordance with an income tax agreement, the submission of the withholding tax statement may be lifted. This change aims at simplifying the above-mentioned application procedure.
The Ministry of Finance adds that although the submission of the withholding tax statement may be lifted from the above-mentioned FINI’s application case, if a photocopy of the withholding tax statement is in addition provided with the FINI application case, it may expedite the process for taking, matching with the system and reviewing operation of the case that is carried out by the handling National Taxation Bureaus and to shorten the time spent to complete these processes.
The Ministry of Finance states that to build up a tax administration environment in favour of developing Taiwan’s capital and securities market, the Ministry of Finance and its subordinate National Taxation Bureaus will remain open to feedback from various sectors, while balancing the need to streamline public services and aligning relevant measures with those proposed by the international anti base erosion and profit shifting actions. In this regard, the benefits provided by an income tax agreement may be optimized.
Contact person: Mr. Kuo Ting Chen, Section Chief.
Contact Number: +886-2-23228150
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=368f515ede6a48e8af31066147ed0160