As the international investment climate continues to evolve rapidly, the Committee appreciates the government’s efforts to improve Taiwan’s tax environment to encourage inbound investment, enhance transparency, and attract talent. We encourage the government to continue to align available tax incentives with practical industry needs. We also urge the government to develop a more foreigner-friendly interface to reduce compliance burdens.

In addition, we recommend revising the calculation method used in determining whether companies qualify as Taiwan real-property-rich under the house and land transactions income tax regime in order to align with international practice and achieve tax neutrality. Amid uncertainty in the U.S. tariff regime, we further suggest providing zero-tariff treatment for U.S.-origin vehicles and introducing retroactive tariff relief measures to promote bilateral trade exchanges between Taiwan and the United States.

Suggestion 1: Amend Article 22 of the Act for the Recruitment and Employment of Foreign Professionals regarding tax exemption criteria for Employment Gold Card holders.

Pursuant to the Act for the Recruitment and Employment of Foreign Professionals and the “Regulations Governing Reduction and Exemption of Income Tax of Foreign Specialist Professionals,” high-level foreign professionals holding an Employment Gold Card are entitled to tax incentives. If such professionals reside in the R.O.C. for at least 183 days in a taxable year and their annual salary income exceeds NT$3 million, one-half of the amount exceeding this threshold is exempt from gross consolidated income tax.

However, according to administrative rulings (Ministry of Finance Letters No. 0930451436 and No. 09604503990), the amount by which the fair market value exceeds the exercise price of Employee Stock Options (ESOs) is classified as “Other Income.” This classification also applies to equity acquired by employees of Taiwan branches of foreign companies through global share schemes or the transfer of treasury shares under the Company Act. Under a literal interpretation of the current Act for the Recruitment and Employment of Foreign Professionals, such “other income” falls outside the scope of tax mitigation available to Gold Card holders.

The legislative intent of the Act for the Recruitment and Employment of Foreign Professionals is to incentivize high-level international professionals to relocate to Taiwan. In global practice, the remuneration structure for senior executives and R&D personnel in multinational corporations typically includes a substantial component of equity-based compensation or stock-based incentives. In many instances, the remuneration for high-level personnel of foreign subsidiaries in Taiwan is paid in the form of shares in the foreign parent company.

Although such payments are fundamentally remuneration for services rendered in Taiwan, they are frequently categorized as “Other Income” for tax purposes. Because the current tax incentives are strictly limited to “Salary Income,” this creates a misalignment with the policy objective of attracting top-tier foreign talent and significantly diminishes the tax-related incentives for such professionals to seek Gold Card employment in Taiwan.

We recommend that the tax authorities take into account the prevailing compensation practices for international professionals, reviewing the current scope of tax incentives, which is currently restricted to “Salary Income,” and evaluate the feasibility of incorporating remuneration derived from equity-based payments into the scope of applicable tax exemptions.

Suggestion 2: Publish English-language trust filing templates in a timely manner.

In July 2024, the Ministry of Finance (MOF) issued a tax ruling stipulating that when trust assets include a controlled foreign corporation (CFC) and meet the applicable CFC taxation requirements in Taiwan, offshore trustees must complete the trust income filing for the preceding year by January 31 each year. In practice, however, most offshore trustees do not possess Chinese language proficiency, and the content of the trust filing forms are subject to frequent updates, creating challenges for offshore trustees in keeping pace with evolving requirements. To enable offshore trustees to understand the filing requirements early and make adequate preparations, the Committee recommends that the National Taxation Bureau publish the English version of the trustfiling templates and relevant guidance in a timely manner. Trustees would then have sufficient time to review and comprehend the requirements and complete the filing process, enhancing overall filing efficiency and accuracy.

Suggestion 3: Amend the formula for determining the status of real-property-rich companies in the reform of the house and land transactions income tax.

Following the introduction of the new house and land transaction income tax regime in July 2021, differing views have been expressed regarding the mode for determination of “Taiwan real-property-rich” companies (land-rich companies). Currently, income arising from the disposal of shares/share capital in a domestic or foreign profit-seeking enterprise on or after January 1, 2016, is subject to the new tax regime if (i) the individual or enterprise directly or indirectly holds more than 50% of such enterprise on any day within one year prior to the transaction date, and (ii) 50% or more of the value of such shares/share capital is attributable to Taiwan real properties.

This rule applies even when the underlying Taiwan real properties are subject to the old tax regime. In addition, the formula for determining the value ratio is to take the fair market value of Taiwan real properties as of the transaction date as the numerator, and the invested company’s recorded net asset value as the denominator. The use of these two different bases for calculation — fair market value for the numerator and net book value for the denominator — inevitably distorts the ratio and may discourage multinational enterprises’ restructurings and M&A deals. Our recommendations are as follows:

3.1   Consider the impact of liabilities when calculating the ratio of value attributable to Taiwan real properties. In cases where the invested company is debtfinanced, loss-making, or adopts a high dividend payout policy, the use of net asset value as the denominator is not an appropriate quantitative indicator to determine whether the company is a land-rich company. In fact, under international tax practice, whether a company is regarded as a realpropertyrich company is generally determined by reference to the company’s total asset value rather than net asset value.

Paragraph 28.4 of the Commentary on Article 13 of the OECD Model Tax Convention on Income and on Capital (2017) also points out that the value of real properties is typically compared with the value of total assets without taking into account debt or other liabilities. The 2025 update to the model convention makes no changes to the comment in this regard. Accordingly, we recommend that the denominator of the formula be revised to be the total asset value of the invested company as reflected in its financial statements or as determined based on the fair market value (transaction price).

3.2   Exempt share exchanges under the Business Mergers and Acquisitions Act. In cases where a share exchange conducted in accordance with the Business Mergers and Acquisitions Act does not result in a loss of control by the ultimate beneficial owners over the shares/share capital of the invested company, or control over the underlying Taiwan real properties, we recommend that such intragroup restructurings be excluded from the application of the new tax regime.

3.3   Exclude real properties subject to the old tax regime from the real-property-rich determination. We suggest that if the Taiwan real properties owned by the invested company are subject to the old tax regime and the investor has acquired more than 50% of the invested company’s shares/share capital on or before December 31, 2015, the disposition of such shares/share capital should be exempt from the new tax regime.

Suggestion 4: Adopt appropriate policies in response to recent developments in the U.S. tariff regime.

As Taiwan continues to navigate global supply chain restructuring, geopolitical realignment, and increasing trade uncertainty, strengthening economic cooperation with key strategic partners is essential. The United States remains one of Taiwan’s most important trading partners and a critical source of advanced automotive technologies, including electric mobility, intelligent transport systems, and commercial vehicle innovation.

Adopting zero-tariff treatment for U.S.-origin vehicles would reinforce bilateral trade cooperation, enhance market openness, and support Taiwan’s broader industrial transformation goals, which include decarbonization as a key priority. It would not only reduce cost burdens for businesses and consumers but also improve Taiwan’s competitiveness as a regional automotive and logistics hub.

Specifically, we recommend the following:

4.1   Implement zero-tariff treatment for U.S.-origin vehicles across L, M, and N categories. The Committee recommends that the MOF and other relevant authorities consider granting zero customs duty treatment to U.S.-origin vehicles, including both electric vehicles and internal combustion engine vehicles, across L, M, and N vehicle categories, to enhance bilateral trade cooperation and improve market competitiveness. Eliminating tariffs on U.S.-origin vehicles would also help align Taiwan’s tariff structure with its broader trade and industrial policy objectives.

4.2   Introduce retroactive tariff relief. The following measures would facilitate fair and stable implementation:

• • Apply zero-tariff treatment retroactively to vehicles imported within six to 12 months prior to the effective date of the policy.
  • Allow affected importers of record to apply for customs duty refunds or offsets upon verification of U.S. origin documentation.

Due to long procurement cycles, shipping timelines, and homologation procedures, many importers commit to vehicle orders several months in advance. Without retroactive relief, businesses that imported vehicles shortly before the policy’s implementation may face unfair treatment and market distortion. A transitional refund mechanism would maintain pricing stability and strengthen taxpayer confidence.