Taiwan income tax treaty development in 2021 – New treaty with Saudi Arabia and Korea

In 2021, Taiwan added a treaty with Saudi Arabia to its network, allowing enterprises and individuals from both countries to benefit starting January 1, 2022. In addition, Taiwan signed a long-awaited treaty with Korea on November 17, 2021. This treaty will take effect on a pre-determined date once both parties complete their internal procedures.

Most of these treaties include a “Business Profits” provision, which many multinational companies (MNCs) are familiar with. More importantly, during the COVID-19 pandemic, a significant proportion of work and services have been performed remotely. This shift could mean that withholding tax obligations previously considered unavoidable may now be reduced or eliminated.

We therefore recommend that MNCs review transactions that may have been subject to Taiwan withholding tax and take the opportunity to reclaim and reassess any taxes that could potentially be reduced.

The table below summarizes the reduced withholding tax rates in accordance with various treaties: