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Taiwan: Reduced business tax rate, banks’ NCD transactions; refund opportunities

Taiwan: Reduced business tax rate

The Ministry of Finance on 9 December 2019 issued a tax ruling that concludes a reduced rate applies with regard to the business tax imposed on revenue derived by banks from transactions of negotiable certificates of deposit (NCDs), issued by Taiwan’s central bank. According to the tax ruling, this revenue is subject to business tax of 2% (instead of the business tax rate of 5%).


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Provisions of Taiwan’s business tax law (2014) increased the business tax rate for certain types of revenue derived by banks and insurance companies from 2% to 5%. In general, there are three categories or types of revenue derived by banks and insurance companies:

  • Non-core business revenue (subject to a business tax rate of 5%)
  • Other financial sector core business revenue (subject to a business tax rate of 2%)
  • Bank and insurance core business revenue (subject to a business tax rate of 5%) (the reinsurance premium is subject to a business tax rate of 1%)

The tax ruling (9 December 2019) clarifies that the revenue derived by banks from transactions involving NCDs issued by the central bank falls under the second category of revenue and, thus, that the applicable business tax rate is 2%.

KPMG observation

According to conversations with officials of the Ministry of Finance, tax professionals have confirmed that the tax ruling would also apply to certain previously filed returns. Therefore, there may be refund opportunities for taxpayers that paid the 5% business tax rate on revenue from NCD transactions.

Read a December 2019 report [PDF 254 KB] prepared by the KPMG member firm in Taiwan

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