Not always
We often speak with foreign companies, founders, and service providers who say: “We don’t have a Taiwan entity… why is 20% tax being withheld?”
The good news 👉 Taiwan’s tax system does offer legal relief, even without a tax treaty — if structured and applied correctly.
Below are two key tax incentive paths that foreign companies frequently overlook 👇
🔹 Option 1｜Article 25 – Taiwan Income Tax Act
Best suited for:
🚢 International transportation
🏗 Construction projects
🧠 Technical / engineering services
⚙ Machinery & equipment leasing
✅ Applicable even without a Taiwan branch or agent
✅ Clear scope, relatively faster review
💡 Technical service cases may reduce the effective tax rate from 20% to ~3%
⚠ Important limitation:
General management fees or royalty income usually do NOT qualify.
🔹 Option 2｜Article 15-1 – Taiwan Source Income Rules
Commonly used for:
💻 SaaS & platform services
📊 Cross-border professional services
📈 Businesses with real overseas operations
✅ Tax based on government-prescribed industry profit margins
✅ Possible allocation between Taiwan and overseas value creation
💡 In practice, effective tax rates are often around 6% (case-by-case)
⚠ Practical note:
Review timelines can be longer, and profit margins / industry classification often require discussion with the tax authority.
📌 There is no “one-size-fits-all” solution
The right approach depends on:
• Your business model
• Income type
• Where value is actually created
• Short-term vs long-term Taiwan exposure
Choosing the wrong route can mean overpaying tax — or creating audit risk.
🤝 How we help
At LY CPA Firm, we regularly assist foreign companies and individuals with:
✔ Taiwan source income analysis
✔ Article 25 vs Article 15-1 feasibility assessment
✔ Supporting documentation & tax authority communication
✔ Practical, defensible tax positions — not aggressive shortcuts
If you’re earning income from Taiwan and want clarity before tax becomes a problem,
📩 feel free to reach out for a discussion.
