Important information about the new profit-seeking enterprise income tax reform when filing in 2019

The National Taxation Bureau of the Southern Area, Ministry of Finance stated that according to the newly amended Income Tax Act promulgated, the following changes went into force. 1. The income tax rate for profit-seeking enterprises is different in each of the three consecutive years beginning with filing the tax in 2019 (the taxable year 2018). The income tax rate for profit-seeking enterprises will rise from the current 17% to 20%. If the total taxable income of an enterprise is less than NT$500,000, the income tax rate shall increase gradually by 1% per year onwards to 20%. 2. The tax rate on undistributed surplus earnings decreases from 10% to 5%.   (1) From the taxable years 1998 to 2017 (the filing years 2000 to 2019), if there are any earnings of the current year not distributed by a profit-seeking enterprise, an additional profit-seeking enterprise income tax shall be levied at the rate of 10% on such undistributed surplus earnings.   (2) Beginning from the taxable year 2018 (the filing year 2020), the aforesaid tax shall be levied at the rate of 5%. 3. The withholding tax rate on dividends increases from 20% to 21%. For taxation fairness and reducing the gap of dividend taxation between domestic and foreign investors, the withholding tax rate of dividends distributed to non-residents has been raised from 20% to 21%. 4.Abolishment of the imputation tax system Because of the abolishment of the imputation tax system, profit-seeking enterprises will no longer be required to set up a shareholder imputation credit account or to update the records in such account.   The Bureau reminds taxpayers that a profit-seeking enterprise should pay attention to these amendments while declaring an annual income tax return, making its current final report on its total business income or on liquidation income so as to protect its own tax-related interest.   Press Release Contact: Ms. Wang,First Examination Division Tel: 06-2298027