Royalties paid in 2011 and thereafter for foreign patents may be exempt from Taiwan income tax

05/22/2013

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Royalties paid in 2011 and thereafter for foreign patents may be exempt from Taiwan income tax The Ministry of Finance and the Ministry of Economic Affairs have finally reached a consensus on expanding the scope of tax exemption on royalties paid for patents, as prescribed under Point No. 5 of the Rules Governing the Applications for Exemption from Income Tax on Royalty and Technical Service Fees Collected by Foreign Profit-Seeking Enterprises from Manufacturing Industries, Technical Service Industries and Power-Generating Industry ("Rules"), whereby the royalties paid for foreign patents will also be exempt from income tax, and such income tax exemption will apply retroactively to such royalties paid in 2011 and thereafter. However, the tax exemption on technical service fees for special technologies, as prescribed under Point No. 7 of the Rules, will be cancelled. According to the Income Tax Act, the royalties and technical service fees received by a foreign entity for providing its patents, trademarks, and special technologies to a Taiwan entity are, in general, subject to 20% tax which must be withheld by the Taiwan entity upon making the payment, unless tax exemption approval is obtained. Under the current No. 5 of the Rules, the royalties that are eligible for tax exemption are limited to those for patent rights that have been approved by the Taiwan Intellectual Property Office. As a result, in practice, foreign entities may include income tax cost in royalties; in that case, the actual cost to Taiwan entities is increased. Under the revised Rules, as long the patent rights licensed are within the valid period of such patent rights, and are provided to Taiwan entities for use by way of technical cooperation, tax exemption could be granted. Furthermore, as mentioned above, technical service fees will no longer be exempt from tax under the revised Rules. In that case, an application for applying a lower withholding tax rate (3% instead of 20%) is worth considering. The Ministry of Finance and the Ministry of Economic Affairs will jointly publish the revised Rules shortly. If you have any questions or require any further information, please feel free to contact this firm.

外國專利授權金擬免稅，可望降低廠商專利成本 財政部與經濟部已達成共識，就「外國營利事業收取製造業技術服務業與發電業之權利金及技術服務報酬免稅案件審查原則」中第五點專利權權利金的免稅範圍，擴及至外國核准有案之專利權，並同意追溯自2011年專利授權案件均可適用。惟同時將就上開審查原則第七點，外國營利事業提供專門技術予中華民國營利事業所收取之技術服務報酬之免稅優惠取消。 按現行所得稅法規定，外國營利事業提供其專利、商標及專門技術予中華民國營利事業所取得之權利金收入及技術服務報酬，除非經核准免納所得稅，原則上應由中華民國營利事業於給付時就源扣繳20%所得稅款。 查現行審查原則第五點，對於專利權權利金免稅之範圍，僅限於在中華民國智慧財產局核准有案之專利權，至於未經核准之外國專利，則無免稅優惠的適用。由於實務上，外國營利事業會將此稅款成本反映在權利金價額上，造成中華民國營利事業實際負擔之成本增加，經財政部與經濟部兩部會多次協商，終於達成共識，並將在近日發布修正後的審查原則。 依據新的審查原則，只要在專利權有效期間內，以技術合作方式授權中華民國製造業及技術服務業使用，縱使未經國內核准的外國專利權的權利金，亦可申請免納所得稅。 然而值得注意的是，財政部在放寬外國專利權得予免納所得稅優惠的同時，仍堅持取消上開審查原則第七點中外國營利事業提供專門技術之免納所得稅優惠。因此今後就取得技術服務報酬，企業應考慮申請核准適用較低的扣繳稅率(3%)，以減少其稅捐成本。 若您對上述法令修正或適用有任何疑問，請隨時與本所聯繫。