Tax News Update    Email this document    Print this document  

April 23, 2021
2021-0845

Taiwan extends validity period of withholding tax relief at source for certain foreign institutional investors

The National Taxation Bureau of Taipei, Ministry of Finance, issued a notice1 on 17 March 2021 to the Taiwan Stock Affair Association, which indicates that if a foreign institutional investor (FINI): (i) is a recurring applicant for withholding tax relief at source (RAS) advanced approval for dividend or interest income within three years from the latest approval; and (ii) completed FINI type A, B, C or D2 in the application form, the validity period of the recurring RAS approval (if granted) will be extended up to 24 months.

According to the notice, the validity period may be extended up to 24 months if the FINI submits the recurring RAS application within three years from the latest approval with a validity period ending on 30 June. If the validity period of the latest approval ends on 31 December, the tax authority may grant the recurring RAS approval with a validity period of 18 months.

Consequently, if a FINI has a recurring RAS approval expiring on 30 June 2021, it is recommended that the RAS application is submitted before the expiration date, i.e., 30 June 2021. The FINI applicant should expect to receive the RAS approval with a validity period of 24 months from 1 July 2021 to 30 June 2023.

As noted, if a FINI has a recurring RAS approval expiring on 31 December 2021, it is recommended to submit the recurring RAS application by the end of February 2022. The tax authority may grant the approval prior to the end of March 2022 with a validity period of 18 months from 1 January 2022 to 30 June 2023.

If a FINI has a recurring RAS approval expiring on 30 June 2022, it is recommended to submit the recurring RAS application by the end of February 2022. The tax authority may grant the approval prior to the end of March 2022 with a validity period of 24 months from 1 July 2022 to 30 June 2024.

This new practice is expected to benefit FINIs applying for recurring RAS approval, thereby improving cashflow and reducing the administrative obligations of claiming withholding tax refunds.

_________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young (Taiwan), Taipei

Ernst & Young LLP (United States), Asia Pacific Business Group, New York

_________________________________________

ENDNOTES

  1. Cai Bei Guo Shuei Shen Yi Zh No. 1100008732.
  2. The RAS application form defines FINI types A, B, C, and D as follows:
    • Type A: The fund, trust, or trustee is deemed to be the beneficial owner of the income according to the provisions of the applicable DTA.
    • Type B: The FINI invests with the status of a fund, and that fund is a resident of the other Contracting State.
    • Type C: The FINI does not invest with the status of a fund but by means of holding a trust relationship with residents of the other Contracting State, and that trust is a resident of the other Contracting State.
    • Type D: The FINI does not invest with the status of a fund, but as an entity self-funding its investment capital.
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 1996 – 2024, Ernst & Young LLP

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

EY US Tax News Update Master Agreement | EY Privacy Statement