Taiwan Income Tax on Cross-Border E-Services: 20% Withholding or a May Return

No Taiwan office, no Taiwan income tax. Many foreign online sellers assume exactly that. For much of their Taiwan revenue it does not hold. Since tax year 2017, Taiwan has taxed the fees that foreign enterprises earn from cross-border electronic services (電子勞務) sold to buyers in Taiwan, and the buyers covered include individuals, businesses and institutions (Ministry of Finance ruling of January 2, 2018). The working rules are in a Ministry of Finance directive, the 外國營利事業跨境銷售電子勞務課徵所得稅作業要點, issued on May 11, 2018 and last amended on October 13, 2023 ("the directive" below).

Business tax, Taiwan's VAT, has its own threshold and calendar, covered in Selling Apps, Games or SaaS to Taiwan Without an Office. This column covers income tax.

Which online revenue counts as Taiwan-source

Point 3 of the directive sorts services by how they are delivered. Fees for real-time, interactive, convenient and continuous services supplied to buyers in Taiwan are Taiwan-source; the examples are online games, drama, music, video and advertising. A product finished abroad and simply downloaded, such as standalone software or an e-book, is not Taiwan-source. That changes when the product can only be supplied with the participation and assistance of individuals or businesses in Taiwan.

SaaS is not among the examples. A hosted product used online without downloading meets the directive's definition of an electronic service (point 2), and for services with no physical place of use the directive offers only the two groups above.

A foreign platform's fees are Taiwan-source whenever the buyer or the seller on the platform is in Taiwan. Licensing patents, trademarks, copyrights or similar rights online for use in Taiwan falls outside the regime; the payment is a royalty under item 6 of Article 8 of the Income Tax Act.

Business tax and income tax also cover different ground. The ministry's own example is an e-book sold to an individual in Taiwan. It falls within business tax. Yet it can be sold without the participation of individuals or businesses in Taiwan, so it is not Taiwan-source income and carries no income tax (MOF Q&A on cross-border e-services income tax, part 2, Q3).

From revenue to tax: 30%, 50% and 20%

Point 4 of the directive starts from Taiwan-source revenue. A seller that can produce books and records deducts its actual costs. One without books, but with contracts and evidence of its main business line and its onshore and offshore transaction flow, uses the ministry's industry standard net profit rate (同業利潤標準淨利率) for that business; for platform services the rate is 30%. Where neither applies, the tax office sets the rate at 30%. A higher actual rate found by the office prevails.

Next comes the profit contribution ratio (境內利潤貢獻程度): the share of total profit earned by the Taiwan part of the transaction flow. Transfer pricing documentation, work plans or reports that split the Taiwan and offshore contribution let the seller use the actual figure. If the whole flow, or both the place of supply and the place of use, is in Taiwan, the ratio is 100%. What about ads? The ministry's Q&A uses a foreign company running online ads for a Taiwan company, set to play in Taiwan, as its 100% example. Everything else defaults to 50%, or a higher actual ratio if the office finds one.

As of October 2026 the rate is 20% (Standards of Withholding Rates for Various Incomes, Article 3). Where the tax office accepts 30% and 50%, the tax works out at 3% of revenue. That figure is simple multiplication (20% × 30% × 50%); the ministry publishes no "effective rate". Without an approval, a Taiwan business that withholds takes 20% of the gross payment.

Business buyers withhold; consumer sales are filed by you

For a foreign enterprise with neither a fixed place of business nor a business agent in Taiwan, point 6 of the directive makes the collection method depend on who pays. When the buyer is a Taiwan business or institution, the payment falls within the withholding scope of Article 88 of the Income Tax Act. The buyer withholds 20% of the payment when it pays. If the seller has an approved net profit rate and ratio, the buyer may instead apply 20% to income computed with them. Within 10 days from withholding the buyer must pay the tax to the Treasury and file the withholding certificate, with five extra days when three or more consecutive national holidays fall in that window (Article 92, paragraph 2). Say an ad-tech firm in Austin bills a Taipei retailer NT$1,000,000 for a campaign served in Taiwan (an invented example). Without an approval, the retailer pays the firm NT$800,000 and sends NT$200,000 to the Treasury.

Consumers are different. A subscriber or gamer in Taiwan withholds nothing, so the foreign seller files and pays itself, or through a Taiwan tax agent, on the Ministry of Finance eTax Portal (www.etax.nat.gov.tw) between May 1 and May 31 of the year after the income year (Income Tax Act, Article 73, paragraph 1; Enforcement Rules, Article 60). If May 31 is a rest day, the deadline moves to the next working day. A tax agent must be an individual living in Taiwan or a business with a fixed place of business there, approved by the tax office.

Before that first return, a seller not registered for business tax completes a qualification registration on eTax. It uploads its home-country registration certificate, authenticated by a Taiwan mission or other body recognized by Taiwan, a local court or a notary, with a Chinese translation if the document is in a foreign language (directive, point 9). A seller already registered for business tax uses that account. Changes must be registered within 15 days. Tax is paid in New Taiwan dollars, and the seller bears any remittance fees.

Skipping the return is costly. Income found by the tax office after no return was filed is taxed and fined up to three times the tax; under-reporting on a filed return draws a fine of up to twice the tax evaded (Article 110).

App stores add one wrinkle. A foreign platform that collects the price is taxed on the full amount. To be taxed only on its fee, it must document what it passed on to developers and, where a pass-through is Taiwan-source income of a foreign developer, show that Taiwan tax was paid (directive, point 6). Tax it withholds from those pass-throughs is due by the 10th of the following month (point 8).

Getting the 30% and 50% approved

A seller applying on its own goes to the tax bureau where the central government sits, the National Taxation Bureau of Taipei; through an agent, it applies to the agent's local bureau (directive, points 2 and 5). Since December 16, 2021 a Taiwan payer that can show it actually bears the withholding tax may also apply, to its own local bureau (Taxation Administration release). The application can be made in advance or with the annual return, backed by contracts, a description of the business and its transaction flow, and evidence of the main business line.

Too much withheld before approval? Where tax withheld for tax year 2017 or later exceeds the tax computed on the approved basis, the seller may claim the excess within 10 years from the date it received the income (directive, point 10). The 10-year window dates from the October 13, 2023 amendment; claims already outside the old five-year period at that time stay under the old rule.

Vietnam has agreement relief; the United States does not

Vietnamese developers have the Taiwan–Vietnam tax agreement, in force since May 6, 1998. Under Article 7, paragraph 1, a Vietnamese enterprise's profits are taxable only in Vietnam unless it carries on business in Taiwan through a fixed place of business (固定營業場所) there, and then only on the profits attributable to it. Relief is not automatic. Article 23 of the Regulations Governing the Application of Agreements for the Avoidance of Double Taxation requires a residence certificate from the Vietnamese tax authority, proof of no permanent establishment in Taiwan (or no business through one) and income documents, filed with the tax office where the payer is located. Once it approves, that office tells the payer not to withhold. Self-filed income can be covered by a claim made with the return, and the eTax Portal has an application form for e-services sellers. Tax already withheld can be reclaimed within 10 years from payment; tax more than five years old when the regulations were amended on April 8, 2025 stays under the old rule (Article 34). More on the agreement: Vietnamese Companies with Taiwan Income.

US sellers have no such route. As of the Ministry of Finance list of income tax agreements updated September 4, 2026, the United States appears only under a 1988 shipping and air transport agreement. A US SaaS or ad-tech company is left with the approval route above. How the Taiwan tax is credited at home is a question for a US tax adviser, or a Vietnamese one on that side. Withholding on intercompany payments is covered in Paying a US or Vietnamese Parent from Taiwan.

Hovering International Law Firm can be reached at wei@hoveringlaw.com.tw if you need to check whether your service is Taiwan-source or what an agreement claim should contain.

Consumer revenue earned in Taiwan during 2026 goes on a return filed between May 1 and May 31, 2027. Invoices paid by Taiwan businesses are taxed sooner, at the moment of payment, unless an agreement exemption has been approved.

Official sources

• Ministry of Finance, 外國營利事業跨境銷售電子勞務課徵所得稅作業要點 (issued May 11, 2018; amended December 16, 2021 and October 13, 2023) and its amendment history
• Ministry of Finance, ruling 台財稅字第10604704390號 of January 2, 2018
• Income Tax Act (last amended September 11, 2026), Art. 8, Art. 73, Art. 88, Art. 92, Art. 110
• Enforcement Rules of the Income Tax Act (last amended February 21, 2022), Art. 60
• Standards of Withholding Rates for Various Incomes (各類所得扣繳率標準, last amended June 30, 2021), Art. 3
• Regulations Governing the Application of Agreements for the Avoidance of Double Taxation (適用所得稅協定查核準則, last amended April 8, 2025), Art. 23, Art. 34
• Taiwan–Vietnam income tax agreement (signed April 6, 1998; in force May 6, 1998), Art. 7
• Ministry of Finance eTax Portal, Q&A on income tax for cross-border e-services (listed on the FAQ page, updated December 29, 2025) and the agreement business-profits exemption form for e-services sellers (updated May 30, 2023)
• Taxation Administration, Ministry of Finance, release of December 16, 2021 on applications by withholding agents
• Ministry of Finance, Department of International Fiscal Affairs, list of Taiwan's income tax agreements (updated September 4, 2026)

Checked: October 7, 2026