Taiwan Introduces Draft Tax Incentive Amendments for Foreign Professionals

Taiwan is taking steps to make the island even more attractive to highly skilled foreign professionals. The government has proposed draft amendments to the Regulations Governing Reduction and Exemption of Income Tax of Foreign Specialist Professionals, expected to take effect in 2026. These changes clarify eligibility for preferential tax treatment and introduce flexibility around work permits, especially for professionals working remotely.

For foreign employers, understanding these updates is essential to ensure tax compliance, optimize incentives, and structure employment arrangements correctly. This post walks you through the draft amendments, key deadlines, and practical considerations for hiring foreign talent in Taiwan.

Legal Framework

The Taiwanese tax incentive for foreign professionals is grounded in law, not just policy. It is established under Article 20 of the Foreign Talent Act and implemented through the Regulations Governing Reduction and Exemption of Income Tax of Foreign Specialist Professionals.

1. Article 3 defines who qualifies.
2. Article 4 explains how the incentive is calculated.
3. Article 5 lists required documentation.
4. Article 6 outlines consequences for non-compliance.
5. Article 7 specifies filing deadlines.

Understanding these Articles helps foreign employers navigate the process confidently and avoid pitfalls.

Key Changes in the Draft Amendments

One notable update is the expansion of recognized professional fields under Article 3. In addition to finance, medicine, and academia, fields such as digital technology, biotechnology, and environmental sciences are now eligible. The “sports” category has been updated to “athletics.”

Another key change is the flexibility around work permits. Previously, the timing of a work permit or Employment Gold Card could limit eligibility for tax incentives. Under the draft amendments, submitting these applications alongside or before a standard work permit can trigger retroactive eligibility, allowing professionals to benefit from incentives from the start of their employment.

Finally, the incentive itself, defined in Article 4, allows a 50% tax exemption on annual salary above NT$3 million for the first five years. This also applies to certain overseas income under Taiwan’s Income Basic Tax Act, helping employers plan compensation packages more efficiently while staying compliant.

Deadlines and Documentation

The draft amendments emphasize strict adherence to deadlines and documentation. Applications generally must be submitted during the annual tax filing period by May 31 (Article 7). If permit issuance is delayed for reasons beyond the professional’s control, a one-month grace period may apply.

Documentation required (Article 5) includes:

• Proof of first-time residence approval.
• Employment contracts demonstrating engagement in a recognized professional field.
• Copies of SWP or Employment Gold Card approval.
• Payroll and tax records in the prescribed format.

Incomplete submissions or missed deadlines can result in permanent loss of tax incentives and retroactive tax adjustments under Article 6. Early planning is therefore essential.

Employment and Immigration Considerations

Even if a professional works remotely, any engagement connected to Taiwan is considered regulated employment. Employers should ensure the role supports Taiwanese operations, clients, or revenue streams, avoid misclassifying employees as independent contractors, and maintain clear contracts aligned with local standards. Aligning employment authorization, payroll, and tax filings ensures compliance and smooth operations.

Role of an Employer of Record

Managing all these requirements independently can be complex. An Employer of Record (EOR) like Tarmack provides a practical solution. An EOR can act as the local employer, manage contracts, payroll, and statutory benefits, support work permit and Employment Gold Card processes (Articles 5 and 6), and ensure compliance with evolving tax incentive rules (Articles 4–7). This allows foreign employers to focus on business objectives while meeting statutory obligations efficiently.

Advisory Observations

Taiwan’s draft amendments are designed to attract global talent while enforcing statutory compliance. Foreign employers should treat hiring connected to Taiwan as a regulated activity requiring early planning and coordination. Key steps include determining the appropriate work authorization pathway, aligning employment and payroll processes with permit issuance, filing tax incentive applications on time, and considering an EOR like Tarmack to mitigate operational and compliance risks. With these measures, foreign employers can leverage Taiwan’s skilled talent pool, access tax incentives, and minimize legal and operational exposure.