Income Tax Exemption of Business Profits under an Agreement for Foreign Enterprises


National Taxation Bureau of the Southern Area, Ministry of Finance (NTBSA) stated that, in order to avoid double taxation, prevent tax evasion and take into consideration matters relating to the economic situation, trade and investment between the mutual parties, the government had signed comprehensive income tax agreements with 32 countries. If an enterprise of the other Contracting State derives taxable business profits which may be exempted from income tax based on the Tax Agreement, it shall prepare relevant documents and submit the application to the tax authority of that jurisdiction.

  NTBSA expressed that, where the business profits a foreign profit-seeking enterprise derived within the territory of the R.O.C., which are taxable according to the domestic law, is entitled to exemption from income taxes in accordance with the provisions for business profits under Income Tax Agreements, that enterprise shall, according to Article 13 of “Regulations Governing Application of Agreements for the Avoidance of Double Taxation with Respect to Taxes on Income”, submit the Resident Certificate issued by the tax authority of the other Contracting State, relevant documents proving that it has no permanent establishment within the territory of the R.O.C., or does not carry on its business through a permanent establishment within the territory of the R.O.C., and relevant documents providing information of the income, and apply to the tax collection authority-in-charge where the payer of such income is located for approval.

  NTBSA would like to issue a reminder that, when a foreign profit-seeking enterprise plans to apply for tax exemption under a Tax Agreement, it should carefully examine whether it fulfills the qualifications. If the requirements are met, the enterprise shall fill out the application form and submit it with a photocopy of the relevant contract (with a Mandarin transcript), Resident Certificate issued by the tax authority of the other Contracting State, relevant documents providing infromation of the business profits and the original power of attorney (if the case is applied for by an agent) to the competent tax authority of the payer. To save time and protect your interests, please prepare in advance the above-mentioned necessary documents.

Press release contact person:
Ms. Wu, First Examination Division
Tel: 06-2223111 ext.8035

Reference URL:https://www.mof.gov.tw/Eng/Detail/Index?nodeid=319&pid=86438