Taiwan's Tax System and Framework in 2025

Taiwan operates a comprehensive tax system based on both residence and source principles, ensuring that individuals and businesses are taxed according to their income origin and residency status. This dual approach supports fairness while aligning with international taxation standards. The framework includes major taxes such as Comprehensive Income Tax, Business Income Tax, Goods Tax, Estate and Gift Tax, Securities Transaction Tax, Customs Duties, and various property-related levies.

For enterprises headquartered in Taiwan, global income is subject to consolidation and taxation under the Business Income Tax regime. Where foreign taxes have already been paid on overseas earnings, eligible taxpayers may claim foreign tax credits by submitting appropriate documentation. Conversely, foreign-based companies earning income from sources within Taiwan are required to pay tax only on that locally-sourced revenue.

Key Tax Categories in Taiwan

The Taiwanese tax landscape features a broad range of levies designed to support public finance and economic regulation. These include:

• Comprehensive Income Tax (individual income tax)
• Business Income Tax (corporate income tax)
• Goods and Services Tax (GST) equivalents like the Goods Tax
• Estate and Gift Tax
• Securities Transaction Tax
• Customs Duties
• Land Value Tax and Agricultural Land Tax
• Land Value Increment Tax
• Household Property Tax
• Deed Transfer Tax
• Entertainment Tax

These taxes are administered at two levels: national and local. National taxes—such as income and goods taxes—are collected by central authorities, while local governments manage property and transaction-based taxes including land value and deed taxes.

Major Taxes and Applicable Rates in 2025

Tax Jurisdiction and Scope

All forms of business operations in Taiwan—including sole proprietorships, partnerships, corporations, and cooperatives—are liable for taxation. This covers sectors ranging from agriculture, forestry, fisheries, and mining to manufacturing and services. Tax obligations depend on legal structure, income level, and geographic source of revenue.

Comprehensive Income Tax Overview

As of 2025, the progressive tax brackets for Comprehensive Income Tax remain closely aligned with inflation-adjusted thresholds. The rates are updated annually based on the Consumer Price Index (CPI), ensuring real-income neutrality. Current brackets are as follows:

The threshold adjustments help mitigate bracket creep and maintain taxpayer equity amid rising living costs. Dependents, disability allowances, insurance premiums, and charitable contributions can also reduce taxable income through itemized deductions.

Business Income Tax Structure

The Business Income Tax rate has been stabilized since 2018, promoting predictability for corporate planning. Key provisions include:

• Enterprises with annual taxable income up to NT$120,000 are exempt from Business Income Tax.
• For income exceeding NT$120,000, a flat rate of 20% applies across all enterprise types.
• A safeguard clause limits the final tax liability: the amount due cannot exceed half of the income above the NT$120,000 threshold, protecting smaller firms from disproportionate burdens.
• In transitional years 2018 and 2019, preferential rates of 18% (2018) and 19% (2019) applied to businesses earning between NT$120,000 and NT$500,000, reinforcing gradual reform.

This tiered relief mechanism supports small and medium-sized enterprises (SMEs), which form the backbone of Taiwan’s economy. Additionally, cross-border companies can leverage tax treaties and unilateral credit systems to avoid double taxation—an important consideration for multinational investors.

Foreign professionals working in Taiwan are taxed on Taiwan-sourced income, with residency status determined by duration of stay. Those residing over 183 days per year are considered tax residents and must report worldwide income. For expatriates seeking compliance and payroll support, SailGlobal offers tailored offshore human resource solutions, including tax advisory and employment administration for international teams operating in Asia.