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October 21, 2021

Taiwan proposes to extend concessional tax rate for core revenues for banking and insurance businesses

Executive Summary

The Taiwan Ministry of Finance (MOF) issued a ruling (Tai Tsai Shuei Zi No. 11004585970) on 30 September 2021 that proposes amendments to the “Regulations Governing the Scope of Core Business Revenues from the Banking and Insurance Business of the Banking and Insurance Industries” (the Amendment). To align the tax burdens on different sectors of the financial services industry, the Amendment would expand the 2% business tax rate for banks and insurance companies to income derived from investments in the trading and holding of short-term notes and certificates of deposit (reduced from the business tax rate of 5%).

This Alert summarizes the key change introduced by the Amendment.

Detailed discussion

On 9 December 2019, the Tai Tsai Shuei Zi No. 10804586520 ruling established that certificates of deposit income would be subject to the 2% business tax rate. Therefore, the Amendment is completing the regulations by expanding the scope of core business revenues of banking and insurance businesses to include income from investments in short-term notes and the trading and holding of certificates of deposit issued by the Central Bank. These types of income will be subject to the reduced 2% business tax rate.

The taxation of income from investments in short-term notes would apply as of the effective date of the Amendment. The 2% tax rate is already in effect for income from the trading and holding of certificates of deposit, given the Tai Tsai Shuei Zi No. 10804586520 ruling is in effect.

The Amendment will apply to income where the taxation is not yet assessed prior to the enactment of the Amendment.


As revenue derived from short-term notes and certificates of deposit will be subject to the reduced 2% business tax rate, this Amendment is likely to be beneficial for taxpayers in the financial services industry.

Taxpayers should consider evaluating the impact of the Amendment on their operations and discussing with their tax advisors whether action should be taken to protect a taxpayer’s rights to benefit from the reduced tax rate once the Amendment is effective.


For additional information with respect to this Alert, please contact the following:

Ernst & Young (Taiwan), Taipei

Ernst & Young LLP (United States), Asia Pacific Business Group, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago


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