The foreign profit-seeking enterprise of the contracting state, signed DTA with our country, derives business profits which are taxable according to the domestic law, and is entitled to a reduced rate or exemption in accordance with the provisions for business profits under the DTA, that enterprise shall, according to the provisions of the applicable DTA, submit the Resident Certificate issued by the tax authority of the other Contracting State, relevant documents which prove the enterprise has no PE within the territory of the ROC or dose not carry on its business through a PE within the territory of the ROC, and relevant documents providing information of the income (e.g. billing statement, invoice, service procedures, the evidence of service), the original of application form, the original of power of attorney, the photocopy of agreement (including Chinese translation),etc, and apply to the tax collection authority-in-charge where the payer of such income is located for approval, if the enterprise having no permanent establishment or business agent within the territory of the ROC；or may submit the documents in the preceding paragraph for the application of the DTA while filing the annual income tax return by its fixed place of business located within the territory of the ROC or filing a tax return and making tax payment by its business agent, if the enterprise having a permanent establishment or business agent within the territory of the ROC.
According to Subparagraph 5, paragraph 1, Article 3 of the Income Basic Tax Act, this Act is not applicable to them. Therefore, the implementation of the Income Basic Tax Act will not increase their tax burden.
Where a profit-seeking enterprise operates in two or more industries and files its income tax returns in accordance with the Directions for the Implementation of Expanding the Scope of Document Review Relating to Profit-seeking Enterprise Income Tax Returns, the profit-seeking enterprise shall calculate its profit ratio based on the standard profit ratio of the main industry that contributes higher revenue.
Since January 1,2018, Institutions or Organizations which received dividends or surplus earnings shall be included in their income (income other than sales of goods or services),and shall be taxed or exempted in accordance with the "Standards Governing Application of Income Tax Exemption to Educational, Cultural, Public Welfare, Charitable Organizations or Institutions" issued by the Executive Yuan.
According to Article 6 of “The Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals”, with the exception of having permanent establishments or business agents within the territory of R.O.C., a foreign institutional investor investing in securities shall appoint an agent within the territory of R.O.C to file and pay taxes on the investor’s behalf. The agent shall summit the following documents when applying for approval with the National Taxation Bureau with jurisdiction over the location where the agent´s household registration/registered office is located:
1、The agent shall submit the documents evidencing his/her/its qualification. A natural-person agent shall hold an ID card of the R.O.C. with full legal capacity and have annual income of not less than NT$1,000,000. A legal-person agent shall be a company incorporated in accordance with the laws of the R.O.C. and be permitted to engage in agency business.
2、The agent shall submit Power of Attorney ("POA") certified by an R.O.C overseas embassy / consulate, its functional equivalent, the court, or a notary public where the appointer resides or where his/her legal representative signs the document.
3、The triplicate 「Agent Appointment and Acceptance Form」.
4、A copy of the completed registration certificate issued by Taiwan Stock Exchange Corporation.
Institutions or organizations and their affiliated organizations shall be considered as business entity stipulated in the second subparagraph of Article 6 of Value-added and Non-value-added Business Tax Act if they sell the goods or services. Where an institution or organization fails to provide or obtain certificates to or from others or to keep certificates as required by the law, a fine shall be imposed on such institution or organization in accordance with Article 44 of Tax Collection Act. On the other hand, If they had not obtained legal evidence or lacked of complete accounting records for the financial income of non-sale goods or services, the above provisions would not applicable. However, they should be notified to improve within a time limit. Those who have not improved in time shall be handled in accordance with the "Standards Governing Application of Income Tax Exemption to Educational, Cultural, Public Welfare, Charitable Organizations or Institutions" issued by the Executive Yuan.
1、Foreign profit-seeking enterprises having permanent establishments or business agents
If a profit-seeking enterprise whose head office is outside the territory of R.O.C. has a permanent establishment or business agent located inside the territory of R.O.C., the permanent establishment or business agent should keep separate accounting books and calculate annual income in accordance with Article 41 of the Income Tax Act. The permanent establishment or business agent should also make provisional tax payment and file provisional tax return in accordance with Article 67 of the same Act. After the end of taxable year, the permanent establishment or business agent should make income tax payment and file income tax return during May 1 to May 31 of each year according to Article 71 or Paragraph 2 of Article 73 of the same Act.
2、Foreign profit-seeking enterprises having neither permanent establishments nor business agents
In the case of a profit-seeking enterprise whose head office is outside the territory of R.O.C. and has neither permanent establishment nor business agent, having income within the territory of R.O.C. as stated in Article 88 of the Income Tax Act, the tax withholder shall withhold the income tax payable based on prescribed withholding rates. In the case the taxpayer has income which does not fall within the withholding scope as stated in Article 88 of the Income Tax Act, and is not able to file tax return itself, the taxpayer should appoint an individual residing in R.O.C. or an enterprise with permanent establishment in R.O.C. as its agent upon the approval of the collection authority, to file income tax return for the profit-seeking enterprise.
SMEs shall, within 3 months before the start of the period of filing the profit-seeking enterprise income tax return, submit the required documents and information in the prescribed format to the central authority in charge of relevant business to determine whether the research and development activities meet the regulations of investment tax credit of R&D expenses for SMEs. According to the provisions of the regulations, if there are R&D expenses that must be approved specially, they should be submitted at the same time. In addition, the profit-seeking enterprise is still required to fills in the format specified on page A15-3 of the income tax return, and the tax incentive is applicable.
Please also note additionally that if a company complies with both the provisions of Article 10 of the Statute for Industrial Innovation and Article 35, paragraph 1 of the SMEs' ACT, it shall choose one tax incentive to apply and fill at the time of filing the income tax return, and shall not change after the deadline for filing the income tax return to avoid double application of tax incentives.
The following 4 kinds of expenses must be approved specially:
1、The annual amortization or payment of the special technology purchased or used for research and development activities.
2、Expenses for professional or special databases, software programs and systems purchased for research and development activities.
3、Expenses for appointing the foreign college or research institution to study, or hiring full-time teachers from the foreign college or R&D persons from the foreign research institution.
4、Expenses for jointly engaged in research and develop with the domestic or foreign companies, colleges or research institutions.
The application of above-mentioned R&D expenses shall be concurrently submitted with the application for the determination of research and development activities within 3 months before the start of the period of filing the profit-seeking enterprise income tax return in the year when the expenses are incurred, the first annual amortization or the amortization expense period, to the central authority in charge of relevant business.
For the profit-seeking enterprise of the ROC has income derived within a country that has signed a DTA with the ROC, if it requires to apply for the tax treaty, it can download the application form of issuing the __ year Resident Certificate for profit-seeking enterprise in the "eTax Portal, Ministry of Finance/Book and Documents Download". The profit-seeking enterprise require to complete the application form and attach relevant information to the branch (the office) of National Tax Administration. If the tax authorities of the other contracting country has its official form of Resident Certificate, please complete the form and submit it concurrently.
Q11：Is it possible to file income tax returns of the previous taxable year together with final report or liquidation income report before the start of the annual income tax declaration period? How to identify the starting date of the assessment period?
Profit-seeking enterprises are able to file income tax returns of the previous taxable year together with final report or liquidation income report before the start of the annual income tax declaration period. According to Paragraph 1, Article 71 of the Income Tax Act, the declaration period of the aforementioned income tax returns is not deemed as altered after accepted by Tax authorities (The declaration period is May 1 to May 31 for calendar year system). Therefore, the statutory starting date of the declaration period is deemed as the filing date. For example a profit-seeking enterprise files its income tax return for the taxable year 2017 together with its final report or liquidation income report on March 1, 2018, the filing date is deemed as May 1, 2018 and so is the starting date of the assessment period.
(Explanatory Decree NO.10100616550 by Ministry of Finance on September 25, 2012)
Whether the income tax of education, culture, public welfare or charity institution or organization (hereinafter referred to as Institutions or Organizations) should be exempted or not is based on the "Standards Governing Application of Income Tax Exemption to Educational, Cultural, Public Welfare, Charitable Organizations or Institutions (hereinafter referred to as Standards Governing Application of Income Tax Exemption)" issued by the Executive Yuan.
Institutions or Organizations have income other than sales of goods or services shall be exempted from income tax, only if they satisfy all the provisions stipulated in the first paragraph of Article 2 of Standards Governing Application of Income Tax Exemption. The income from the sale of goods or services shall be taxed, but could deduct the deficit of the non-sale of goods or services related to their purpose of establishment.
If Institutions or Organizations do not satisfy the requirements of Article 2 of Standards Governing Application of Income Tax Exemption, all of the income shall be taxed.
In accordance with Paragraph 2, Article 49 of Enforcement Rules of the Income Tax Act, a profit-seeking enterprise with both its head office and other permanent establishments located within the territory of R.O.C. shall jointly file its profit-seeking enterprise income tax return with the tax office in the registration district where the head office of the profit-seeking enterprise is located when filing the tax return. An enterprise with its head office located outside the territory of R.O.C. and other permanent establishments located within the territory of R.O.C. shall respectively file their tax returns with the tax offices in the registration districts where the permanent establishments are located when filing tax returns .For example, the business address of a profit-seeking enterprise was under the jurisdiction of Daan District of Taipei City in 2020. The aforementioned enterprise moved to Xinyi District on April 25, 2021. The enterprise shall file its profit-seeking enterprise income tax return for the taxable year 2020 with Xinyi Branch of National Taxation Bureau in May 2021.
The following institutions or organizations that satisfied the two requirements are exempt from filing the annual income tax return：associations of various industries、associations of fellow provincials、alumni associations、associations for people with family name、industrial labor unions of profit seeking enterprises、parents' associations of all kinds of school、Lions Clubs International、associations of Rotary International、Junior Chamber International、Kiwanis International、Zonta International、community development associations、associations of senior citizen、industrial development and investment promotion committees of city or county、associations of social welfare、associations of industrial park、volunteer fire brigades、civil servants associations.
1、There were no business or operating income（including selling goods or services）, and only had membership fees, donations, and fund deposit interest.
2、Both the total annual revenue from membership fees, donations, fund deposit interest and total assets of the fund did not reach NT$100 million.
According to Income Tax Act Article 75, a profit-seeking enterprise shall make its current final report up to the date of dissolution, closure, amalgamation or ownership transfer, and then its total business income and taxable amount on a prescribed form to the tax collection authority-in-charge within 45 days, and further make payment voluntarily before filing the income tax return. Furthermore, any income earned from liquidation during the period of liquidation shall be reported on a prescribed form to the tax collection authority-in-charge within 30 days from the date of completion of liquidation, and the taxpayer shall, before filing his tax return, make payment voluntarily at the prescribed rates applicable to the profit-seeking enterprise in the taxable year. But this is not applicable to those enterprises which are exempt from the liquidation process in accordance with other acts.
Additionally, the deadline of filing the current final report is counted from the next day of issuance of the document approved by the jurisdictional authority, and the term "period of liquidation" as referred to in the preceding Paragraph for the company organization shall be the time limit in accordance with the Company Act; for the limited partnership organization shall be the time limit in accordance with the Limited Partnership Act; and for others shall be 3 months from the date of dissolution.