January 15, 2026 | Economic Daily News

Pre-Application for Preferential Withholding Rates

The Taipei National Tax Administration (NTA) stated that foreign investors earning dividends or interest from domestic stocks and bonds may pre-apply to apply for tax treaty benefits. This allows invested companies to apply the preferential withholding tax rate directly at the time of payment. Foreign investors should submit their applications by the end of February to allow the NTA to issue approval letters by the end of March.

The primary advantages of pre-applying for these preferential rates include:

• Avoiding Inconvenience: It removes the need to apply for tax refunds after the fact.
• Capital Efficiency: It prevents the unnecessary tying up of investment funds.

Extensions for Existing Approvals

For applicants who have received approval letters within the last three years and demonstrate a continued intent to invest in Taiwan, the approval period can be extended. If the NTA finds no significant irregularities after reviewing the Foreign Institutional Investor (FINI) residency certificate, power of attorney, and beneficial owner self-declaration, the approval can be extended for a maximum of 24 months.

Current Tax Treaty Status

According to data from the Ministry of Finance, Taiwan has signed and implemented 35 comprehensive income tax treaties.

• Participating Countries: These include Japan, South Korea, the United Kingdom, Germany, the Netherlands, Australia, and others.
• Tax Rates: Withholding rates for dividends and interest under these treaties are typically 10% or 15%.

Streamlined Procedures for Funds and Trusts

The Taipei NTA noted that obtaining a pre-approval letter for tax treaty cap rates before dividends are distributed makes the entire process significantly simpler for Foreign Institutional Investors (FINIs).

To improve audit efficiency, the Ministry of Finance issued an interpretation in 2019 regarding foreign investors structured as funds or trusts:

• If the fund or trust is a resident of a treaty partner country, it can provide a self-declaration of beneficial ownership to prove its status.
• This self-declaration exempts these entities from submitting certain documents required under standard audit regulations.

Important Deadlines

The NTA reminds foreign investors that to ensure they receive their approval letters before dividend payments—allowing the invested company to use the capped tax rate immediately—they must submit their application documents by the end of February of the current year. This timeline enables the NTA to issue the necessary approval letters by March 31.