Companies registered in Taiwan or the Taiwan branches of foreign companies are required to pay, between September 1 and September 30 each year, an amount of tax equal to 50% of the income tax on their previous year’s tax return .
Provisional income tax is the prepaid tax payment that the company can deduct the tax payable with the paid provisional tax payment when they file the current year’s tax return.
Q: In the event that the financial performance in the first half of this fiscal year is less favorable this year due to economic factors or other influences, is it still imperative to remit such a substantial sum in provisional taxes?
A: If a Tax Attestation Report for provisional taxation for the company for the first half of the year and if provisional reporting is carried out as scheduled, it is permissible to calculate the provisional tax amount based on the profit during the first six months of the current fiscal year, in accordance with the provisions of the Income Tax Act pertaining to income tax for profitable enterprises.
At Songjer CPA, in addition to notifying clients of their provisional tax obligations, our primary function is to assist clients in a comprehensive review of the financial statements for the first half of the fiscal year. We meticulously compare the reports from January to June with the figures from the previous fiscal year. If we observe that the current year’s financial performance doesn’t align with the previous year’s, we engage in a thorough assessment and conduct discussions with our clients regarding the suitability of obtaining a Tax Attestation Report for provisional taxation. Example:
Suppose the profit in 2022 amounted to $1,200,000, resulting in a tax liability of $240,000. Under the standard provisional tax rules, the company would be required to pay 120,000 for the current fiscal year.
That is 240,000 X 50% = 120,000
However, if the profit for the first six months of the year only amounts to $400,000, the company can engage a certified public accountant to issue a Tax Attestation Report. This would reduce the tax obligation to just 80,000
That is 400,000 * 20% = $80,000.
Q: Our company was set up this year, or had no tax payable last year. Do we need to pay provisional tax?
A: No. Provisional tax is based on 50% of the previous year’s tax payable, so a company with no tax payable in its previous year’s return, including a newly established company, has nothing to prepay. If the calculated provisional tax is NT$2,000 or less, no payment or filing is required either.
Relief for provisional tax: US tariff impact
Deferral or instalments (since 2025) A company affected by the US reciprocal tariffs that cannot pay its provisional tax in one lump sum may apply to the local National Taxation Bureau, within the September payment period, to defer payment for up to one year or pay in monthly instalments over up to 36 months, without interest. This is a deferral, not an exemption: the provisional tax must still be paid.
The Covid-19 exemption from provisional tax applied only up to fiscal year 2023 and is no longer available.