Newsletter
Ministry of Finance Promulgated the "Regulations Governing Mutual Tax Exemption on Cross-Strait Sea and Air Transport" On 1 July 2010
To promote cross-strait economy and trade, and to facilitate interaction between the peoples of mainland China and Taiwan, Taiwan and mainland China signed the "Agreement on Cross-Strait Sea Transport" and "Supplemental Agreement on Cross-Strait Air Transport." Furthermore, in order to resolve the cross-strait double taxation issues faced by cross-strait sea and air transport businesses, by the principle of reciprocity, both parties agreed that a party's revenue from transport generated in the other party's territory is not subject to business tax or income tax of the territory.
As a result, the Ministry of Finance announced the Regulations Governing Mutual Tax Exemption on Cross-Strait Sea and Air Transport (''Regulations'') on 1 July 2010, providing that 0% business tax and income tax exemption apply to the revenue generated from transporting passengers and cargos from Taiwan to mainland China by sea or air. The Regulations applies to mainland Chinese sea transport businesses beginning 15 December 2008 and to mainland Chinese air transport businesses beginning 25 June 2009 ("effective dates").
Furthermore, if mainland Chinese companies engaged in air and sea transport paid taxes on income generated from transporting passengers and cargos from Taiwan to mainland China after the two effective dates, or have already declared the taxes, they may apply for a tax refund within five years of the date of tax payment.