Author: FinTax
1. Introduction
Taiwan’s attitude towards crypto assets is characterized by both openness and prudence. In recent years, the use and trading of crypto assets in Taiwan has gradually increased, and the participation of financial institutions and related enterprises has gradually increased. Taiwan recognizes the high speculative nature of the crypto asset field and its potential money laundering and terrorist financing risks, so it has taken gradual and improved measures in terms of supervision. The Taiwan Financial Supervisory Commission (hereinafter referred to as the "FSC") has actively promoted the standardized management of VASPs (Venture Asset Service Providers) by issuing relevant policies based on market dynamics. In terms of taxation, the Taiwan government's tax policy on crypto assets is also gradually clarifying, avoiding excessive intervention in the market while striving to provide a fair and transparent tax environment.
2. Basic tax system in Taiwan
There are 19 tax items in Taiwan, China, which can be divided into "national taxes" and local taxes (municipal and county taxes) according to the ownership of tax revenue. According to the provisions of Taiwan's current tax-related laws and regulations, among the various "national taxes", except for tariffs, which are collected by the Taiwan "Ministry of Finance Customs Administration", all other "national taxes" are the responsibility of the "National Taxation Bureau"; local taxes are the responsibility of the municipal governments and county (city) local government tax authorities. This article briefly sorts out the income tax, business tax, and securities transaction tax related to crypto assets, as follows.
2.1 Income tax
The Income Tax Act is the basic law for levying income tax in Taiwan. The law divides income tax into two categories: comprehensive income tax and profit-making enterprise income tax. Taiwan's comprehensive income tax can be compared to the individual income tax in mainland China. It is a tax on various incomes of an individual within a certain period (usually one year), including salary income, interest income, dividend income, rental income, property transaction income, etc. The tax base is the taxpayer's net comprehensive income for the whole year, that is, the balance after deducting tax exemptions, deductions and special deductions from the total income. Resident taxpayers should file a comprehensive income tax settlement declaration from May 1 to May 31 of the following year, and should declare the income, tax exemptions and deductions of their spouse and dependent relatives together.
In terms of tax rates, Taiwan's comprehensive income tax adopts a progressive tax rate, which is divided into four levels: 5%, 12%, 20%, 30% and 40%. In addition, the tax exemption amount, standard deduction, special deduction for salary income, special deduction for physical and mental disabilities, tax brackets and the amount of tax exemption for retirement income are adjusted according to the Income Tax Act every time the consumer price index rises by more than 3% compared with the index of the previous adjustment year. In 2025, the tax exemption amount for comprehensive income tax in Taiwan is NT$97,000. Taiwan's profit-making enterprise income tax can be compared to the corporate income tax in mainland China. It is a tax on the profit income of taxpayers in a fiscal year, but its taxpayers include sole proprietorships, partnerships and cooperatives in addition to corporate legal persons, which covers a wider range. According to Taiwan's "Income Tax Act", all profit-making enterprises operating in Taiwan, including public, private or public-private joint ventures, with the purpose of profit, sole proprietorships, partnerships, companies and other organizations with business licenses or business premises, such as industry, commerce, agriculture, forestry, fishery, animal husbandry, mining, and metallurgy, must pay profit-making enterprise income tax. The net profit of a profit-making enterprise after deducting various costs, expenses, losses and taxes from its total income for the current year is the tax base.
In terms of tax rates, annual taxable income below NT$120,000 is tax-free, annual taxable income between NT$120,000 and NT$200,000 is taxed at 50% (only the portion exceeding NT$120,000 is taxed), and annual taxable income above NT$200,000 is taxed at 20%.
2.2 Business Tax
The Value-Added and Non-Value-Added Business Tax Act (hereinafter referred to as the Business Tax Act) is the basic law for levying business tax in Taiwan. The Act divides business tax into two types: value-added business tax and non-value-added business tax. The scope of taxation includes the sale of goods, the sale of services, and the import of goods.
Taiwan's value-added business tax is based on the value added in the process of selling goods or services, that is, it is taxed according to the difference between purchase and sale. The current value-added business tax rate is 5%. Starting from 2025, the threshold for taxation will be NT$50,000 for services and NT$100,000 for goods. In addition, the Business Tax Act also makes special provisions for items with zero tax rates, foreign tax refund items, items exempt from value-added business tax, and refunds of overpaid taxes. Unless otherwise provided for in the Business Tax Act, business operators, regardless of whether they have sales or not, shall report their sales, payable or overpaid business tax to the competent tax authorities within 15 days of the next period, every two months. Taiwan's non-value-added business tax is also known as the gross sales tax, which uses the gross amount of goods or services sold as the tax base, that is, it is taxed according to the total sales amount. According to the Business Tax Act, the scope of non-value-added business tax includes the financial industry, special catering industry, small-scale business operators and business operators exempted from reporting sales by the Ministry of Finance, etc., and they shall report on a two-month basis. Those who have payable business tax shall first pay it to the public treasury and submit it together with the payment receipt. However, for small-scale business operators and business operators exempted from reporting sales by the Ministry of Finance, the tax amount shall be determined by the tax authorities, and tax payment notices shall be issued every three months to notify payment.
2.3 Securities Transaction Tax
The Securities Transaction Tax Act is the basic law for levying securities transaction tax in Taiwan. It is a transaction tax levied on the seller according to the transaction price. The scope of taxation is securities, namely bonds issued by governments at all levels, stocks and corporate bonds issued by companies, and other securities approved by the government for public sale. In terms of tax rates, the tax rate for stocks issued by companies and certificates or vouchers indicating stock rights is 3‰, and the tax rate for corporate bonds and other securities approved by the government is 1‰. 3. Overview of Taiwan’s Crypto-Asset Taxation and Regulatory System 3.1 Characterization of Crypto-Assets in Taiwan In Taiwan, the scope of crypto-assets and virtual assets is the same. This article uniformly uses the term crypto-assets, but retains the original name of the relevant regulations. Taiwan’s characterization of crypto-assets includes two categories: securities and virtual commodities, and the two do not conflict. The characterization of securities comes from the Financial Supervisory Commission Order issued by the Financial Supervisory Commission in 2019, which determined that crypto assets with securities nature are securities, among which the requirements for securities nature are "liquidity", "investors' investment", "from the same common business or plan", "investors have the expectation of making profits", and "profits mainly depend on the efforts of the issuer or a third party". Crypto assets are defined as "the use of cryptography and distributed ledger technology or other similar technologies to represent the value that can be stored, exchanged or transferred digitally". In the press release "The Financial Supervisory Commission Calls on the Public to Carefully Assess the Risks of Virtual Asset Transactions" issued by the Taiwan Financial Supervisory Commission in 2024, the Financial Supervisory Commission defines crypto assets as "highly speculative digital virtual commodities, not currencies, no intrinsic value, and no trading price fluctuation limits". We believe that the relationship between these two characterizations is that ordinary crypto assets are virtual commodities, while crypto assets with securities nature are securities. 3.2 Overview of Taiwan’s Crypto-asset Tax System 3.2.1 Income Tax Both individuals and enterprises are required to pay income tax on the income from crypto-asset transactions, and losses from crypto-asset transactions can also be deducted before tax. Specifically, when calculating the income tax of crypto-assets, ordinary enterprises should follow general financial accounting principles, treat the income from crypto-asset transactions as revenue, summarize them on an annual basis, and calculate the tax payable in accordance with the relevant provisions of Taiwan’s tax law. Crypto-asset trading platform operators calculate the income tax based on service income (income from platform fees and transaction commissions) minus costs and expenses, and their income tax calculation method is similar to the tax treatment of traditional service industries. If the individual is an individual investor, the individual should include the income from crypto-asset transactions in the amount of property transactions to calculate the payable income tax.
In practice, since the tax authorities can only grasp the funds of buying and selling, without detailed transaction information, it is impossible to clearly know the price and quantity of buying and selling like the centralized trading market of securities, and thus it is impossible to calculate the income of each transaction in detail. Therefore, the income of crypto asset transactions can only be calculated when the funds are withdrawn from the exchange to the investor's account, and the cost can only be calculated based on the remitted funds, that is, the initial funds transferred from the investor's account to the exchange. This calculation method is unreasonable. For example, in the case where all crypto assets are not sold, how to calculate the cost of the sold crypto assets, whether to adopt the individual identification method, the first-in-first-out method or the weighted average method, there is no official regulation for the time being.
3.2.2 Business Tax
The regular buying and selling of cryptocurrencies often involves business tax issues in tax collection and management. The Sales Tax Group of the Taipei National Taxation Bureau of the Ministry of Finance replied in the online discussion forum: "The Ministry of Finance issued Order No. 10904512340 on January 31, 2020: "Second, when individuals trade virtual currencies through the Internet, they should verify the attributes of the currency based on the facts of the case. If it is a general digital product (service), when the monthly sales reach the business tax threshold (the sales of goods are NT$100,000), they should apply for tax registration and pay business tax in accordance with the above regulations; if it is a payment tool, it is not yet within the scope of business tax. It can be seen that when crypto assets are sold as general digital products or services and meet the threshold conditions, business tax should be paid.
Specifically, if the seller is a Taiwanese business entity, it shall pay 5% value-added tax on income; if the seller is a Taiwanese individual, the individual shall apply for tax registration and pay 5% value-added tax on income, unless the monthly sales are NT$5 10,000 yuan or less; cryptocurrency trading platform operators shall charge a business tax of 5% based on all handling service fees. 3.2.3 Securities Transaction Tax Securities transaction tax shall be levied on the trading of crypto assets with securities attributes. The relevant regulations for security token offering (STO) are relatively complete in Taiwan. Issuers shall comply with special laws on cryptocurrencies such as the "Guidelines for the Recording of Matters in the Prospectus for Applying to Issue Virtual Tokens with Securities Nature for Trading at Securities Dealers' Business Places" and the "Administrative Measures for Securities Dealers to Operate the Business of Virtual Tokens with Securities Nature on Their Own", as well as general securities trading regulations such as the "Securities Trading Act", "Standards for the Internal Control System of Securities Dealers", and "Standards for the Venues and Equipment of Securities Dealers and Securities Trading Assistants" before they can operate STO business. According to the Taiwan Finance and Taxation No. 100 issued by the Ministry of Finance of Taiwan in 2020, the STO business shall be conducted in accordance with the "Securities and Taxation No. 100" issued by the Ministry of Finance of Taiwan in 2020. No. 10900005070: "For cryptocurrencies with securities nature and with a fundraising amount of less than NT$30 million and handled in accordance with the regulations of the OTC Markets, other securities that are approved for public sale by the government in accordance with Article 1, Paragraph 2 of the Securities Transaction Tax Regulations shall be subject to a securities transaction tax of 1‰ in accordance with Article 2, Paragraph 2 of the same regulations." This clarifies the securities nature and tax regulations of STO business. In addition, since STO business belongs to securities regulated by the Securities Transaction Tax Regulations, the income from its transactions shall be subject to the income tax suspension regulations of Article 4, Paragraph 1 of the Income Tax Act.
3.3 Taiwan's Crypto Regulatory Framework
Taiwan does not yet have a complete legal regulatory system for cryptocurrencies, but is actively drafting relevant regulations. From the perspective of combating money laundering crimes, the current framework of Taiwan's crypto regulatory system mainly revolves around the "Measures for the Prevention of Money Laundering and Countering Terrorism by Virtual Currency Platforms and Trading Businesses" (hereinafter referred to as the "Money Laundering Prevention Act"), in which the Taiwan "Executive Yuan" designates the "Financial Supervisory Commission" as the money laundering prevention authority for this business. The "Money Laundering Prevention Act" combines the international standards of the Financial Action Task Force (FATF) to focus on preventing money laundering and combating terrorism. Regulatory requirements include strict customer identity verification (KYC), continuous review, large transaction reporting, suspected money laundering transaction reporting, internal control and auditing, etc. Cryptocurrency platforms and trading business businesses must comply with these regulations before they can provide legal crypto asset services in Taiwan. Individuals and legal persons who provide crypto asset services without completing the money laundering prevention registration with the "Financial Supervisory Commission" in accordance with regulations will face severe penalties.
In terms of maintaining the security of crypto asset funds (such as preventing theft and loss), Taiwan is gradually shifting from industry self-discipline to public power supervision. Before 2023, fund security management must be implemented by practitioners and comply with self-regulatory regulations, including: in accordance with the "Key Points of Virtual Currency Industry Security Standards" established by the non-governmental organization "Bitcoin and Virtual Currency Development Association"; and in accordance with the requirements of the ISO/IEC 27001 international security management system to take fund security management measures; obtain certification of this international standard or other international standards. After that, according to the instructions of the Taiwan "Executive Yuan" in March 2023, the "Financial Supervisory Commission" served as the competent authority for "virtual asset platforms with financial investment or payment characteristics" and planned to strengthen the regulation of crypto asset platforms in a step-by-step manner. In September 2023, the "Financial Supervisory Commission" announced the "Guiding Principles for the Management of Virtual Asset Platforms and Trading Business Enterprises (VASPs)" (hereinafter referred to as the "Guiding Principles") as a reference for operators to operate their businesses in compliance with regulations. On the basis of the Anti-Money Laundering Act, the Guidelines regulate the business operations of VASP practitioners: on the one hand, the Guidelines restrict VASP practitioners from operating businesses, such as not issuing stablecoins, not operating derivative financial product trading businesses with crypto assets as the subject, and not operating crypto asset businesses of securities nature without permission; on the other hand, the Guidelines supervise public power from the perspective of fund security through the review mechanism for the issuance and delisting of crypto assets, the separation of VASP operator assets from customer assets, and the advocacy mechanism for VASP operators' internal rules, systems and mechanisms (such as consumer complaint channels, etc.). 4. Summary and Outlook Taiwan's tax and regulatory policies in the field of crypto assets are gradually becoming standardized and transparent. At present, Taiwan regards crypto assets as virtual commodities and securities with economic value, and has established a flexible tax framework. At the same time, the Taiwan Financial Supervisory Commission has strengthened the supervision of crypto asset platforms in terms of anti-money laundering, fund security and investor protection through laws and regulations such as the Anti-Money Laundering Act and the Guiding Principles for Managing Virtual Asset Platforms and Trading Businesses. Looking ahead, Taiwan's crypto asset supervision will further move towards legalization. It has been confirmed that the Financial Supervisory Commission will include "studying VASP special laws to effectively manage VASP market behavior and improve investor protection mechanisms" in its 2025 policy priorities, and it is expected to complete the draft special law and submit it to the Executive Yuan of Taiwan in the first half of 2025; at the same time, the Financial Supervisory Commission has also begun to expand the crypto asset custody business, and will begin accepting applications from businesses for trial business on January 1, 2025, and will announce the list of practitioners who have passed the review after the Financial Supervisory Commission's review. With the improvement of supervision, Taiwan may introduce more detailed tax policies to resolve current controversial issues such as the calculation of crypto asset transaction costs, thereby affecting the trading behavior and investment model of the crypto asset market.
Overall, Taiwan's policies in the field of crypto assets are moving towards a more systematic and international direction, which not only provides investors with a safer trading environment, but also lays a solid foundation for the industry's innovation and sustainable development. In the future, with the implementation of the VASP special law and the optimization of tax policies, Taiwan is expected to occupy a more important position in the Asian crypto asset market.
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