Taiwanese companies paying foreign service providers: withholding tax and exemptions

A Taipei company paying a US software vendor or a Japanese consultant may need to withhold tax before payment. Taiwan's rules depend on whether the service is performed in Taiwan, whether it is a royalty, and whether a treaty or approval applies.

Rashidatou K.Payments editor

Published: 21 October 2026
Reading time: 1 min read

A Hsinchu chip design startup pays a Japanese consultancy NT$1.8 million for engineering advice, partly delivered on site in Taiwan and partly remotely from Tokyo. Its accountant splits the fee: the work performed in Taiwan is Taiwan-source and subject to withholding, unless the Japan-Taiwan arrangement changes it; the remote work may not be.

The rule

Taiwan withholds tax on Taiwan-source income paid to foreign companies that have no fixed place of business or business agent in Taiwan. Common cases:

royalties for the use of patents, software or know-how in Taiwan,
fees for services performed in Taiwan,
interest and some other income.

Rates

The general withholding rate on such payments is 20 percent. Tax treaties and special arrangements can reduce it. Some technical service fees and royalties can qualify for reduced treatment with approval from the tax authority.

Where the service happens

Services performed entirely outside Taiwan may be treated as foreign-source. The tax authority looks at where the work is performed and where it is used. Contracts that separate on-site and remote work make the analysis easier.

Filing

The payer withholds the tax and pays it by the 10th of the month after payment, filing a withholding statement. Penalties apply for failing to withhold.

Agree gross or net

Foreign providers often quote net. If the Taiwanese company grosses up, it bears the 20 percent on top. Settle it in the contract.

Where Rivet fits

Rivet does not file Taiwanese withholding tax. A Rivet business account accepts registered companies after verification, subject to local rules, and pays providers in 120+ countries with each payment matched to its invoice. Rivet is not a bank; regulated partner institutions hold the funds.

Questions people ask

When does Taiwan withhold tax on payments to foreign companies?

When the payment is Taiwan-source income, such as royalties for use in Taiwan or service fees for services performed in Taiwan, and the recipient has no fixed place of business in Taiwan.

What is the rate?

Generally 20 percent, subject to tax treaties and special approvals.

Are services performed abroad taxed?

Services performed wholly outside Taiwan may be foreign-source and not subject to withholding. The tax authority looks at where the service is performed and used.

When is withholding due?

By the 10th day of the month after payment, with a withholding statement filed.

Sources

Written by

Rashidatou K.

Payments editor

Rashidatou writes Rivet's guides to how money moves between countries: the payment rails, what each one costs, and the account details a company needs to get paid in another currency. Every figure in Rashidatou's articles is traced to the scheme rulebook, the regulator or the provider's published price list, and those sources are listed at the end.