The share profits generated from the facilitated investment of Branch Company of the foreign enterprises in Taiwan shall be taxed separately.

The amendment on Tax Law initiated by the Ministry of Finance has been approved by the Executive Yuan yesterday. The share profits gained from the facilitated investment of Branch Company of the foreign enterprises in Taiwan shall be taxed separately at a rate of 20%. Where the foreign enterprise sets up a sub company to facilitate investment, the share profits generated shall remain tax-free

 

The third paragraph 3 of the existing Article 24 of Income Tax Act has been further amended as, where the main business entity that founded outside the territory of Republic of China, but has facilitated investment in the domestic industries, the allocated share profits or net profits thereof shall be exempt from business income tax, pursuant to Article 88 of the above said Act.

 

As for the Sub Company or Branch Company of the foreign enterprise, the profits gained from domestic investment and transferred overseas shall remain taxed with current measure. That is, a foreign sub company will be taxed at a rate of 20% when transferring the profit to its parent company abroad, while a branch company with its main business entity operating overseas will be enjoying a tax exemption with the profit transfer. (2003.12)

CYJ/YVO