Taiwan Confirms No Pillar 2 Schedule, But An Increase To Its Domestic Minimum Tax Rate From 2024

Taiwan’s Ministry of Finance confirmed today there is no set schedule for the introduction of the Pillar 2 GloBE rules in Taiwan. It suggests:

– In the short-term, reviewing Taiwan’s tax system, providing moderate tax incentives to maintain the effective tax rate of MNEs at 15%, and reducing the compliance costs of MNE groups in Taiwan should be the top priority. The Ministry of Finance has previously suggested raising the rate of corporate income tax to 15% (see below).

– In the medium term, in order to ensure other jurisdictions do not levy top-up tax on Taiwanese low-taxed entities, a QDMTT should be considered.

– In the longer term, the introduction of the IIR/UTPR aspects of the GloBE rules will be evaluated, depending on the international implementation status.

Following the approval of the EU Global Minimum Tax Directive, Taiwan’s Ministry of Finance previously stated it would prepare draft legislation for the government to increase Taiwan’s domestic minimum tax rate from 12% to 15%, as permitted under Article 8 of the Basic Income Tax Regulations.

However, this creates a number of issues in the short term with the interaction with the Pillar Two global minimum tax (全球最低稅).