Import Procedures

Under the terms of the Foreign Trade Act, most commodities can be imported freely. In general terms, no import permit or licensing is required and importers can apply for customs clearance directly. However, there are some exceptions. Import permits or documents are required for commodities under the Negative List, which are subject to import restrictions. Commodities under the Negative List include those under certain international treaties or trade agreements and items subject to national defence, society security, cultural protection, hygiene, moral, and environmental and ecological concerns, as well as those subject to policy demands. Products subject to import bans can be imported only with a special import permit from the Board of Foreign Trade, while documents, such as a letter of consent from the relevant authorities, are required for those commodities that are subject to certain importation conditions.
 
A foreign supplier's pro forma invoice (quotation) is required for application of an import permit and the establishment of a letter of credit. Documents required for shipments to or from Taiwan include a commercial invoice, bill of lading or airway bill, and packing list.  A certificate of origin is also required for designated commodities such as sedans, other small passenger cars and chassis, tobacco and alcohol products, and some agricultural products. Shipments of agricultural products, plants, and animals to Taiwan may require certificates of inspection or quarantine issued in the country of origin and are subject to inspection and quarantine upon importation into Taiwan.
 
Commercial invoices are required for all shipments and must show the import license number; Free on Board (FOB), Cost and Freight (CFR), or Cost, Insurance and Freight (CIF) value; insurance; freight; and discounts or commissions, if any. The commodity description and value shown on the commercial invoices must agree with those on the import license, if any. No requirements exist as to the form of a commercial invoice or a bill of lading. A packing list is required for all shipments if the number of cartons in the shipment exceeds two. In addition to the information generally included in a standard bill of lading, all marks and case numbers appearing on packages must be shown. Customs does not permit the grouping of marks or numbers on a shipment of mixed commodities. Most documents presented for use in customs clearance processing must be prepared in Chinese to avoid delays and expedite clearance processing. The Bureau of Foreign Trade (BOFT) set up an on-line import application system.

For more information, please visit the website of the Taiwan Customs Administration.

Specific Import Procedures

Certificates of Origin are required for specific items (tea, shallots and some textile products). Some goods may require a DG certification (perfumes, liquor, chemicals, etc.) in addition to the standard customs clearance documentation. Import permits or documents are required for commodities under the "Negative List", which are subject to import restrictions. Products subject to import bans can be imported only with a special import permit from the Bureau of Foreign Trade. More information on Taiwan Customs Administration.

Distribution channels

According to the latest figures from USDA, Taiwan’s total retail outlets generated USD 32.4 billion worth of sales in 2021, growing by 2.2% compared to 2020. Supermarket sales experienced the strongest annual growth at 7.7%, followed by hypermarket sales growth of 6.5%. Convenience store sales were stagnant due the decrease in the number of commuters during the Covid-19 pandemic. Other retail outlets, including mom-and-pop shops and wet markets, saw an decrease of 10%, to USD 3.6 billion.

International retailers dominate the market, with few domestic players in direct competition. International retail stores have taken advantage of Taiwan's geographical location, high population density, and high disposable incomes. In recent years, the traditional mom-and-pop shops and wet markets have suffered and lost market to hypermarkets, high-end supermarkets and convenience stores. This was also due to the changes in the population structure, as the drop in birth rates led to an increasing number of small families, with people shifting towards supermarkets to buy smaller portions rather than making big groceries in wet markets. However, continued fierce competition from hypermarkets and convenience stores has made it difficult for small supermarkets to survive, whereas sales have been driven by the increase in the number of stores and development of new store formats, such as more neighborhood-focused stores. With one store per every 2,300 people, Taiwan has the highest convenience store density in the world. Convenience store chains are now providing oven-prepared, microwavable meals, bakery products, and other processed food products via these retail channels.

7-11, FamilyMart, Costco, PXMart and Carrefour dominate the market, which is relatively fragmented. However, the scale of traditional players has been too small to compete with modern chains. Meanwhile, existing premium supermarkets have maintained steady growth, and new outlets have continued to open, incorporated within different concepts to attract consumers’ attention.

Distribution market players

International retailers dominate the market, with few domestic players in direct competition.
The Taiwanese food retail market is so divided:
•    Convenience stores (USD 12.2 billion sales in 2021)
•    Hypermarkets (USD 8.2 billion sales in 2021)
•    Supermarkets (USD 8.4 billion sales in 2021)
•    Others (USD 3.6 billion sales in 2021).
In the convenience store section, the main players are 7-Eleven (6,432 outlets), Family Mart (4,000 outlets), Hi-Life (1,538 outlets), and OK Mart (830 outlets).
International players such as Costco (14 outlets) and Carrefour (66 outlets) dominate the hypermarket sector with more than 50% market share. The third player, A Mart, has 15 outlets.
Major supermarkets include: PX Mart (1,133 outlets), Simple Mart (800 outlets), Taiwan Fresh Supermarket (50 outlets) and Mia C’bon (25 outlets).

Retail Sector Organisations

Bureau of Foreign Trade, Ministry of Economic Affairs

Consumption Taxes

Nature of the Tax

Business tax (BT) is imposed under two systems: the VAT system and the special BT system (gross business receipts tax - GBRT, which applies to financial institutions, SMEs and certain restaurants).

Tax Rate

The VAT is applied at a 5% flat rate.

Reduced Tax Rate

The Gross Business Receipts Tax (GBRT) rates are as follows:

- 0.1% for traders in the agricultural wholesale market and small businesses supplying agricultural products
- 1% for small businesses and other taxable persons excluded by the Ministry of Finance from reporting their transactions
- 1% for reinsurance premiums of insurance enterprises (5% for non-core operations)
- 2% or 5% on the sale of services by local financial institutions (generally 5% for banking and insurance companies, except for certain transaction types; 2% on core business revenue and 5% on non-core business revenue for other financial institutions)
- 2% or 5% on the purchase of services from foreign financial institutions
- 15% for nightclubs or restaurants providing entertainment
- 25% for saloons, tearooms, coffee shops, and bars offering companionship (where customers can ask wait staff to sit with them, serve drinks, chat, and sing karaoke)

Other Consumption Taxes

Commodity tax (excise duty) is levied on certain commodities, as specified in the Commodity Tax Act, at the time of dispatch from a factory or import. Tax rates vary from 8% to 30% based on the type and value or volume of goods.

- Rubber tyres: 10% or 15%
- Beverages: 8% or 15%
- Cement: TWD 280 to TWD 600 per ton
- Plate glass: 10%
- Oil and gas: TWD 110 to TWD 6,830 per kilolitre or TWD 690 per ton
- Electrical appliances: 10% to 20%
- Vehicles: 15% to 30%.

A special commodity and service tax ("luxury tax") is imposed on the sale, manufacture, and import of certain high-end items: passenger vehicles, yachts, aircraft, helicopters, and light vehicles costing over NTD 3 million; furniture; and nonrefundable memberships costing over NTD 500,000. The tax rate is generally 10% or 15% of the total price, which includes necessary charges, commodity tax, VAT, and customs duty.

Corporate Taxes

Company Tax

Tax Rate For Foreign Companies

A company is a resident of Taiwan for corporate income tax purposes if it is incorporated in Taiwan. A non-resident company that has a fixed place of business or business agent in Taiwan is obligated to file a corporate income tax return in Taiwan on its Taiwan-sourced income.

Capital Gains Taxation

Domestic companies' capital gains from the sale of Taiwan companies or securities are exempt from corporate income tax but incur Alternative Minimum Tax (AMT) at 12% (6% for holding periods exceeding three years).
Foreign investors' capital gains from the sale of Taiwan companies or securities are exempt from corporate income tax.
Profit-seeking enterprises' capital gains from land acquired before January 1, 2016, are subject to Land Value Incremental Tax (LVIT) ranging from 20% to 40%.
Resident companies face corporate income tax rates of 20% to 45% on real estate sales since January 1, 2016, while nonresidents connected to a Taiwan branch of a foreign company face 45% tax on real estate held up to two years, or 35% for over two years.
Transfers of shares representing over 50% interest in a company, where over 50% of the value or investment is real estate, trigger 20% to 45% corporate income tax. LVIT on the incremental net land value can be deducted from taxable capital gains.
Capital gains from properties other than securities and real estate are taxed at 20%.

Main Allowable Deductions and Tax Credits

All taxes, other than income tax, are generally deductible, unless where such taxes are related to tax-exempt income. Net operating losses may be carried forward up to 10 years. The carryback of losses is not allowed.

Start-up expenses during the start-up period can be deducted in the year incurred, the same as for interests on loans that are used for business purposes. However, for a loan from a non-financial institution, the interest rate shall not exceed 15.6%/year.

Deductions for losses on bad debts are permitted once specific legal procedures or time conditions have been fulfilled. In the case of such losses, they should initially be applied against the bad debt provision, which should not exceed either 1% of the total outstanding accounts receivable and notes receivable, or the average bad debt ratio from the previous three years.

Certain charitable contributions are not subject to any tax limit (national defence, morale of troops, contribution to government, etc.), while others are subject to various limits under the relevant regulations.
Fines and penalties are not tax-deductible.

The Statute for Industrial Innovation offers tax credits for R&D expenses to Taiwan-based enterprises and limited partnerships. Companies must secure approval from tax authorities for their R&D projects to benefit from these credits. Approved enterprises can choose between:
- A 15% credit on total R&D expenditure for the year, without carryforward.
- A 10% credit on R&D expenditure that can be used in the year incurred and carried forward for two years.
Both options have a cap of 30% of the corporate income tax payable for the year.

Additionally, certain enterprises investing in smart machines, 5G communication networks (from 1 January 2019 to 31 December 2024), or cybersecurity products/services (from 1 January 2022 to 31 December 2024) can receive:
- A 5% credit on the annual investment, or
- A 3% credit that can be used in the year incurred and carried forward for two years.
These credits also have a 30% cap on the corporate income tax payable, which can increase to 50% when combined with other tax credits, with no cap in the final year of credit usage.

From 1 January 2023 to 31 December 2029, key players in the global supply chain can credit up to 25% of R&D spending and 5% of advanced process equipment investments against their corporate income tax, with a 30% annual cap, potentially increasing to 50% when combined with other credits, with no final-year limit.

Small and medium-sized enterprises (SMEs) can deduct up to 130% of salaries for new hires, subject to specific conditions.

Biotech and pharmaceutical companies can claim a tax credit of up to 25% of qualifying R&D expenses, offsetting up to 50% of their corporate income tax annually for five years, with no limit in the final year. Additional incentives include shareholder investment credits and tax deferral programs for top executives and technology investors, along with credits for investments in new manufacturing machinery, equipment, or systems.

Other Corporate Taxes

Land value tax (LVT) is levied on a taxpayer’s total urban and rural land, based on the assigned land value in each municipality administered by the central government or county. LVT is applied at progressive rates from 1% to 5.5%, or at special rates based on the government's assessed land price, depending on land use (e.g., parks, museums, city planning areas). Additionally, land with an assigned value is subject to Land Value Increment Tax (LVIT), which is based on the total government-assessed land value increase when the land title is transferred. LVIT is imposed at progressive rates ranging from 20% to 40%.

Properties acquired after 1 January 2016 and sold after 1 July 2021 are taxed under Joint Property Tax System 2.0. This includes the sale of land, buildings, pre-sold buildings and underlying land, or majority shares (over 50%) in enterprises where over 50% of the value is in Taiwanese land and buildings, excluding listed or OTC stocks. The tax rate varies from 15% to 45%, based on the holding period. The taxable base is the market value minus related costs, expenses, and the increase in government-assessed land value for LVIT purposes. LVIT remains unchanged, and the land value increment is deducted from real estate transaction income to prevent double taxation.

Deed tax is imposed on the transfer of buildings, at rates ranging from 2% to 6% based on the deed price of the property as prescribed by the local real property assessment committee.

A tax is levied on securities transactions (with the exception of government bonds) at the rate of 0.3% on gross proceeds from the sale of domestic shares (reduced to 0.15% for day-trade transactions through 2024) and at varying rates between 0.0000125% and 0.6% on futures transactions.

Stamp tax applies to various documents at different rates: 0.4% on all cash receipts paid by the recipient (0.1% for bid bond deposits); NTD 12 per deed of sale of movable property; and 0.1% of the contract amount for job contracting agreements and contracts for the sale, exchange, donation, or division of real estate, paid by the contracting parties separately.

Capital duty does not exist officially; however, a lump-sum fee of NTD 1,000 or 1/4,000 of the capital (whichever is higher) is levied upon capital subscription.

A special commodity and service tax ("luxury tax") is imposed on the sale, manufacture, and import of certain high-end items: passenger vehicles, yachts, aircraft, helicopters, and light vehicles costing over NTD 3 million; furniture; and nonrefundable memberships costing over NTD 500,000. The tax rate is generally 10% or 15% of the total price, which includes necessary charges, commodity tax, VAT, and customs duty.

Factories, mines, and companies with 50 or more employees must establish employee welfare funds. When a company is founded, it must allocate 1% to 5% of its registered capital, 0.05% to 0.15% of monthly revenue, 0.5% of each employee's monthly wage and allowances, and 20% to 40% of proceeds from scrap sales to this fund.

Taiwan has two social security programs: Labor Insurance and National Health Insurance, with premiums based on an employee's monthly salary. For Labor Insurance, the total rate is 12%, with the employer contributing 70%, the employee 20%, and the government 10%. For National Health Insurance, the rate is 5.17%, with the employer covering 60%, the employee 30%, and the government 10%.
Additionally, a 2.11% supplemental premium applies to other income such as bonuses, professional practice income, dividends, interest, rental income, and part-time earnings. Employers must also contribute 6% of an employee’s monthly salary to their pension accounts at the Bureau of Labor Insurance, while employee contributions are voluntary.

Other Domestic Resources

Department of Taxation

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed

Invest Taiwan

Withholding Taxes

Dividends: 0% (resident) / 21% (non-resident); Interest: 10% (resident) / 15% (non-resident on their interest income arising from qualifying transactions) / 20% (standard rate for non-resident companies); Royalties: 10% (resident) / 20% (non-resident).