How to Apply for Tax Treaty Benefits in Taiwan: Reducing Double Taxation and Withholding Tax Rates

 

Taiwan has signed double tax agreements (DTA) with 35 countries (updated October 2025) to prevent companies and individuals from being taxed by both jurisdictions. If a company operates out of a country that has a tax treaty with Taiwan, the DTA may provide relief from double taxation, depending on the particular service provided and the provisions of the DTA. The following withholding tax rates (in percent) apply to Taiwanese-source dividends, interest, and royalties paid to non-residents where the income is not connected with a permanent establishment in Taiwan.

 

In order to apply for the benefits associated with a tax treaty, an entity in Taiwan may be required by the tax authority to submit a set of documents to the local district tax office for pre-approval.

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Category utilizing the Tax Treaty in Taiwan:

1. Reduced Dividend Income from 21% to 10% or other applicable tax rate when the invested Taiwan company pays a dividend to its foreign shareholder.

2. Reduced Interest Income from 20% to 10% or other applicable tax rate when the Taiwan company pays interest to its foreign debtor.

3. Reduced Royalty Income from 20% to 10% or other applicable tax rate when the Taiwan company pays royalty to the foreign company.

4. If the foreign company does not constitute Permanent Establishment in Taiwan, it may apply for the tax exemption.

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Application Procedure

To enjoy treaty benefits, the foreign company can assign an agent in Taiwan to apply to the local district tax office before making the payment. The process usually involves the following steps:

1. Prepare Required Documents.

2. Submit the Application to the district tax office where the Taiwan client is registered.

3. Tax Office Review: The tax authority examines the documents to verify treaty eligibility.

4. Approval & Withholding Adjustment:

   • If approved, the Taiwan client withholds tax at the reduced treaty rate (or applies exemption).

   • If not approved, the standard statutory WHT applies.

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Required Documents

Typical documents include:

• Tax Residency Certificate issued by the foreign company’s home country tax authority.

• Original contract/agreements between the Taiwan payer and the foreign recipient.

• Application form for treaty benefits (provided by Taiwan’s tax authority).

• Proof of foreign company’s legal status (certificate of incorporation).

• Power of attorney (if a representative in Taiwan is applying on behalf of the foreign company).

• Any additional supporting documents requested by the tax officer.

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Example

• A German company receives royalties from a Taiwan company.

• Standard WHT: 20%

• Treaty rate (Taiwan–Germany DTA): 10%

• Payment of USD 100,000:

  • Without treaty application → USD 20,000 withheld.

  • With treaty approval → USD 10,000 withheld (USD 10,000 tax saved).

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         List of Tax Agreements