Income tax for consulting services


Here is a quick story. One of European partners of a Taiwanese company that i work for, will be paid commission for his work. He will basically receive some % of amount for all orders that he will get from his country (in other words sales commission). His services will be invoiced (he will issue invoice for consulting services). This is the first time work with this business model and I was very surprised when our financial department told me that his income will be taxed in Taiwan at 20%. So, lets say for every 1000 USD that he makes us, he will receive let’s say 10%, which is 100 USD, which will be taxed at 20%, so we will in fact transfer 80 USD to him and 20 USD will be paid for taxes.

Do you have any experience with such business model? I am very surprised that overseas company will be taxed in Taiwan for services it provides (and that our company will pay it sort of on his behalf).



Well, part of the issue lies herein: Is he working for a Taiwanese company or working for an overseas company when he renders these services?

Work for a Taiwanese company, even in the form of commissions, is taxable.

He works for a foreign company.

Does it mean that the income is not taxable?


If your friend doesn’t work for a Taiwanese company, isn’t living in Taiwan, and doesn’t receive income from any source in Taiwan, then i can’t see how he can pay any withholding tax.

BUT, he’s likely receiving a commission or royalty…he’s still likely liable for withholding if the money is sourced from a taiwanese company.

I’d suggest looking at withholding rates, tax treaties and so on… to verify the information. It’s likely true.


I believe the rule is that whenever you pay a service provider outside of Taiwan you have to pay 20% tax to the Taiwanese government. We have had to do that in the past when we pay our own branch offices in other countries for services rendered.

It feels a bit sour, doesn’t it?