Share with your friends

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%).


Related content

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

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal