Businesses should note new tax optimization regulations

The National Taxation Bureau of the Northern Area (NTBNA), MOF, indicated that for the purpose of establishing a fair, reasonable, and competitive income tax system which is in line with international trends, the Income Tax Act was amended on February 7, 2018. Amendments related to profit-seeking enterprise income tax are explained as follows: 1. Abolish partial integrated income tax system In order to simplify the tax system and comply with international trends, starting on January 1, 2018, profit-seeking enterprises do not need to set up and record imputation credit account. This amendment should reduce the cost of tax compliance and reduce disputes. 2. Reasonably adjust income tax rate Since the year of 2018, the tax rate for profit-seeking enterprise income tax has been raised from 17% to 20%. In addition, in order to alleviate the tax burden of low-profit enterprises and provide time to adapt, profit-seeking enterprises with taxable income of less than 500,000 NTD can adopt the annual tax rate of 18% for year 2018, annual tax rate 19% for year 2019, and annual tax rate 20% after year 2020. 3. Simplify the declaration way of profit-seeking enterprise income tax of sole proprietorship and partnership organizations Since the year of 2018, the income of sole proprietorships and partnership organizations has been exempted from the income tax of the profit-seeking enterprise income tax. The profit-seeking enterprise income is directly attributed to the individual income tax of the sole proprietor or the partners, which reduces the tax burden of the small and medium-sized enterprises. 4. Downgrade the tax rate for undistributed surplus earnings Since the year of 2018, the tax rate for undistributed surplus earnings has been reduced from 10% to 5% to facilitate the company to retain earnings to make more investment and contribute to business transformation and upgrade. The Bureau would like to remind companies that adopt the calendar year system should file the tax return for the year of 2018 in May 2019 at the tax rate of 20% (if the taxable income is less than 500,000 NTD, the tax rate is 18%). However, the tax rate for undistributed surplus earnings for the year of 2017 is still 10%. If you have any questions, please visit the website of NTBNA ( to inquire about the relevant laws or call the toll-free service number 0800-000321. We are eager to help!