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September 15, 2022
2022-1381

Taiwan relaxes requirement to submit withholding tax statement from a Foreign Institutional Investor when applying ex-post for reduced tax rate in accordance with an income tax agreement

  • Taiwan's Ministry of Finance (MOF) issued a press release in September 2022 exempting a Foreign Institutional Investor (FINI) from providing physical withholding tax (WHT) statements when reclaiming its WHT refund.
  • This exemption is effective immediately.
  • The objective of this deregulation is to adapt to the e-filing environment and to reduce the administrative burden of a FINI.

Taiwan's MOF issued a press release on 2 September 2022 that in response to the policy of digitalization of the tax administration, a FINI may be exempted from providing the physical WHT statements when reclaiming WHT refunds in accordance with the reduced tax rate under an income tax treaty, effective immediately.

In order to offer more diverse filing methods for taxpayers and streamline the services provided to the public, the National Taxation Bureaus have set up the online platform available for e-filing of WHT statements associated with a nonresident taxpayer's case since 2017. Considering that such e-filing approach also changes the format of WHT statements, as long as the handling National Taxation Bureau can retrieve and revise the FINI's WHT information on its online tax system in accordance with the reduced rate under an applicable tax treaty, the submission of physical WHT statements can be exempted during the FINI's reclaim for WHT refund. This change aims at simplifying the reclaim application procedure and is also in line with the environmentally friendly trend to reduce paper consumption.

The MOF adds that although submission of physical WHT statements may be exempted as discussed above, providing a copy of the WHT statements in question may still help expedite the review process and shorten the timeline of a WHT refund.

This new practice is expected to benefit FINIs applying for a reduced tax rate on dividend income under an income tax treaty by reducing the administration obligation in application.

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

Ernst & Young (Taiwan), Taipei

Ernst & Young LLP (United States), Taiwan Tax Desk, New York

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

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

 

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