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Published List of Application Documents for Tax Exemption on Royalty Payments
Josephine Peng
The Ministry of Finance and the Ministry of Economic Affairs (MOEA) jointly issued a directive on 29 January 2014 stipulating the amendments to the Rules Governing the Applications for Exemption from Income Tax on Royalties and Technical Service Fees Collected by Foreign Entities from Local Manufacturing Industry, Technical Service industrial and Power-Generating Industry ("Rules"). Under the amended Rules, royalties paid to foreign entities for qualified foreign patents, trademarks, and computer programs are exempt from income tax, provided that the foreign entities have filed applications with the competent government authorities (e.g., the Industrial Development Bureau of the MOEA) and the tax authorities, and obtained their prior approval.
The Industrial Development Bureau (IDB) of the MOEA recently posted a list of documents required for filing a tax exemption application with the IDB ("List of Documents"). According to the List of Documents, the following documents are required to be submitted to the IDB along with an application:
(i)A product catalog,
(ii)A copy of the technical cooperation agreement;
(iii)A copy of the Taiwan licensee's factory registration (if the licensee is a manufacturer), or the licensee's company registration card (if the licensee is a technical service provider);
(iv)A copy of the patent certificate issued by competent government authorities (including Taiwan or foreign jurisdiction); and documentary evidence that the underlying technology is key to the Taiwan licensee, but such technology is not available in Taiwan or that although the technology is available in Taiwan, it does not meet the licensee's product specifications (e.g., a statement analyzing the functions provided by the underlying technology and the technology available in Taiwan) (for applying for tax exemption on royalties paid for patents);
(v)A copy each of the confirmation certificate and licensing registration certificate issued by the Intellectual Property Office (IPO) of the MOEA, as well as a sample or catalogue of the subjects which bear the trademark of both the foreign licensor and the Taiwan licensee (for applying for tax exemption on royalties paid for trademarks);
(vi)Relevant documents showing that the foreign licensor owns the copyright of the underlying computer programs (e.g., a copy of the copyright certificate, or an affidavit issued by the foreign licensor), and documents justifying the licensing of the Taiwan licensee to use the said computer programs (for applying for tax exemption on royalties paid for computer programs); and
(vii) A power of attorney for authorizing a Taiwan entity to file the application.
