Taiwan’s tax authority advises on new law that limits tax credits for dividend payments

The National Taxation Bureau of Taipei, Ministry of Finance (NTBT) on December 31 issued English-language guidance on a new law which reduces the tax credits available when dividends are paid to foreign or domestic taxpayers.

The new law, passed by the Legislative Yuan May 16, 2014, halves imputation tax credits available to offset tax on dividend income of domestic individual taxpayers. The new law also allows only half of previously paid tax on undistributed retained earnings to be used as a credit against dividend withholding tax levied on dividends paid to foreign corporate or individual shareholders.

The NTBT said the imputation tax credits should be calculated as follows:

Amount of Shareholders’ (Members’) Imputation Tax Credit = Amount of The Net Dividend (Earning) x Tax Deduction Ratio x 50%

It also said that, as of January 1, companies should halve the imputation tax credits to shareholders “in regard to earnings distribution for year 1998 and each ensuing year” and fill in the dividend statement pursuant to the relevant regulations.

See:

Be the first to comment

Leave a Reply

Your email address will not be published.