Taiwan Today

Foreign investors may enjoy a special tax incentive should a bill being proposed by the Financial Supervisory Commission be passed into law. The FSC has recently come to an agreement with the Ministry of the Interior that foreigners investing at least US$3 million (NT$100 million) in Taiwan would be granted residency or permanent residency and not be subject to the 183-day residency requirement, as a result of which they will be subject to lower withholding tax. The FSC has also come to an agreement with the Mainland Affairs Council concerning the proposed change’s applicability to residents of mainland China. As per their accord, investors from the mainland will enjoy this tax incentive when a policy allowing them to come to Taiwan to engage in asset management comes into force. As to the threshold investment amount needed to qualify, the FSC has stated that nations around the globe have adopted different minimums, but that initially it would be set at between US$3 million and US$5 million. In order to attract overseas capital, the FSC is looking to place language concerning this and other tax incentives in a bill on asset management centers and hopes also to have regulations on capital flows relaxed. However, proposed changes still have yet to gain support from the Ministry of Finance and the Central Bank of the Republic of China. While little headway has been seen from recent interministerial meetings held to discuss the bill, the MOI has come out in support of immigrant investors. The MOI had reservations about lifting the 183-day regulation on permanent residency, as such a change would not have been in accord with the principles by which it enforces the Immigration Act. There is, it stated, also the question of taxation, which made it inadvisable to make such a change. In accordance with current MOF statutes, foreigners residing in Taiwan for more than 183 days must file taxes, with the highest applicable tax rate set at 40 percent. The FSC later announced that meetings with the MOI had led to the latter’s dropping its opposition in exchange for a revision stating that such investors would cease to enjoy the tax incentive should their investment in Taiwan fall below the threshold amount.