Executive summary

On 8 April 2025, the Ministry of Finance (MOF) promulgated the amendment on Article 34 of "Regulations Governing Application of Agreements for the Avoidance of Double Taxation With Respect to Taxes on Income" (Guidelines), primarily doubling, to 10 years, the application period for residents of other contracting states to reclaim income tax treaties. The amendment took effect as of 10 April 2025.

Detailed discussion

Effectively from 10 April 2025, a non-Taiwan resident taxpayer who derives Taiwan-sourced income and has been taxed through either tax withholding at source or tax return filing with Taiwan tax authority, will have a longer timeframe — that is, a 10-year period from the original tax payment date — for submitting supporting documentation to the Taiwan tax authority to reclaim tax refund(s) under the applicable income tax treaty provisions. Prior to this amendment, nonresident taxpayers were eligible only for tax reclaims under the tax treaty provisions within a five-year period.

In January 2025, the MOF introduced a draft amendment aiming to extend the applicable tax treaty reclaim period, which now has been officially finalized. The amendment is compatible with the relevant tax regulations, which already set forth the 10-year period of reclaiming refund of tax overpayment. (For background, see EY Global Tax Alert, Taiwan proposes draft amendment to extend application period for reclaims under income tax treaties, dated 5 February 2025.)

The MOF added clear-cut principles to help determine if a taxpayer's reclaim case is still open within the reclaim period. In cases for which the five-year reclaim period expired on or before 10 April 2025 (i.e., the effective date of amendment), the new 10-year timeframe does not apply. Cases that were still open within the five-year period on 10 April 2025 are included in scope of this extended timeframe.

Additionally, any specific provisions regarding the applicable reclaim period that are prescribed in certain income tax treaties shall continue to prevail (i.e., taking precedence).

Implications

This extension of the applicable reclaim period will benefit the taxpayers by giving them more time to reclaim a tax-overpayment refund under the applicable income tax treaty. It will also ensure overall consistency in the current regulations governing the reclaim period, including the Administrative Procedures Act and the Tax Collection Act.