FINIs Applying for Advance Approval of Reduced Withholding Tax Rates on Dividends or Interest under Tax Treaties Are Advised to Submit Applications by the End of February

The National Taxation Bureau of Taipei, Ministry of Finance (MOF) stated that foreign institutional investors (hereinafter referred to as “FINI”) investing in domestic stocks or bonds and deriving dividends or interest income sourced from the Republic of China (Taiwan) may apply in advance for approval to reduce withholding tax rates on dividends or interest as provided under applicable income tax treaties. Upon distribution of dividends or payment of interest by the investee companies, withholding tax may be levied at the treaty rate and also get rid of the need for subsequent tax reclaim procedures and avoiding the temporary capital tied up.

The Bureau further explained that, in order to enhance the efficiency of reviewing FINI applications for advance approval of treaty-based withholding tax rate caps and to ensure the proper granting of treaty benefits, the Ministry of Finance issued an interpretative ruling on June 24, 2019 (台財際字No. 10800577770). Under this ruling, where a FINI is structured as a fund or trust and qualified as a resident of the other contracting country under the applicable tax treaty, the fund or trust may submit a self-declaration stating that they are the beneficial owner of the income in question as supporting evidence. In such cases, the FINI is exempt from submitting the documents otherwise required under Article 25, Paragraph 5 of the Regulations Governing Application of Agreements for the Avoidance of Double Taxation with Respect to Taxes on Income, including proof of individual beneficiaries’ residence and documents indicating the proportion of beneficiaries who are residents of the other contracting countries.

The Bureau also noted that, in accordance with to Article 228-1, Paragraph 1 of the Company Act, a company’s articles of incorporation may provide that profit distributions or loss allocations be made quarterly or semi-annually. Accordingly, domestic companies may distribute dividends on a quarterly or semi-annually basis. To enable FINIs to obtain advance approval of the applicable treaty withholding tax rate caps on dividends or interest in a timely manner prior to dividend distributions, thereby allowing withholding tax to be applied directly at the capped treaty rate, FINIs are urged to submit their application documents by the end of February. This will facilitate the Tax Authorities’ issuance of approval letters by March 31 of the same year.

For applications that have already obtained approval letters within the past three years, considering such applications have previously been reviewed and approved by the Bureau and the FINI account intent to continue investing in Taiwan, the Tax Authority may, after reviewing the FINI’s certificate of residence, power of attorney, and beneficial owner self-declaration, grant an extension of the approval period for up to a maximum of 24 months, provided that no material abnormalities are identified.

The Bureau calls upon FINIs intending to apply for advance approval of the treaty-based withholding tax caps on dividends or interest to submit their application documents as early as possible in order to obtain approval letters in advance. Relevant application forms may be downloaded from the Bureau’s website.

(Contact person: Chief Chen, Business Income Tax Division; Tel: +886-2-2311-3711 ext. 1308)

Issuing Authority: National Taxation Bureau of Taipei, Ministry of Finance
Date of Release: January 13, 2026
Date of Update: January 13, 2026

Translated by inFINIty Consulting Inc.

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