Taxation
1.Amendments to Income Tax Act
On August 21, 2026, Taiwan’s legislative Yuan passed amendments to Articles 17 and 126 of the Income Tax Act. We summarize below:
(1) On August 21, 2026, Taiwan’s legislative Yuan passed amendments to Articles 17 and 126 of the Income Tax Act. We summarize below:
(a) Beginning with the 2026 tax year, the exemption for each dependent minor child will increase from NT$101,000 to NT$151,500.
(b) For children aged six or below, the exemption may also be combined with the special deduction for preschool children.
| Child | Minor Child Exemption | Preschool child deduction (for children aged six or below) |
| First eligible child | NT$151,000 | NT$150,500 |
| Second and each additional eligible child | NT$151,000 | NT$225,500 |
(2) Certain Social Insurance Premiums Exempted from NT$24,000 Cap:
(a) Under the existing rules, qualifying insurance premiums are generally subject to an annual itemized deduction cap of NT$24,000 per insured person, while National Health Insurance premiums are not subject to the cap.
(b) The amendments extend uncapped treatment to Labor Insurance, Farmer’s Health Insurance, National Pension Insurance and Insurance for Military Personnel Insurance and Civil Servant and Teacher Insurance
(3) Effective Date: Amended rules first applied in filing 2026 individual income tax returns.
Reported by: Paul Hsu / Bradley Chen
2. Amendments to Estate and Gift Tax Act
On 21 August 2026, the Legislative Yuan passed the draft amendments to the “Estate and Gift Tax Act” on third reading. The amendments are primarily intended to reflect the Constitutional Court Judgment No. 11 of 2024, protect the property rights of heirs and legatees, promote tax fairness, facilitate taxpayers’ filing and payment of estate and gift taxes, and ensure the collection of taxes. We summarize below:
(1) To amend the tax liability for property gifted by the decedent to certain relatives within two years before the decedent’s death and included in the taxable estate. Each recipient shall be liable for the portion of estate tax calculated based on the proportion of the property received by such recipient to the total value of the estate. In addition, the executor of a will will be removed from the scope of estate tax taxpayers, and where an executor has been appointed, the executor may file the estate tax return, pay the tax, and apply for administrative review on behalf of the taxpayer.
(2) To amend the rules for calculating the deduction for a surviving spouse’s claim for distribution of the remainder of marital property. When calculating the deductible amount of such claim, any property gifted by the decedent to the spouse within two years before the decedent’s death shall be deemed part of the decedent’s existing property.
(3) To add rules specifying the starting dates of the estate tax filing period and the tax assessment period for cases where ownership of property forming part of the estate is determined by a final and binding court judgment only after the decedent’s death.
(4) To amend the rules governing installment payments and payment of estate and gift taxes by removing the requirement that the tax payable must be at least NT$300,000 in order to apply for installment payments. The amendments also allow heirs to decide by majority vote to use deposits forming part of the estate to pay the tax. In addition, where a recipient applies to use estate property for payment in kind or to pay estate tax attributable to deemed estate property, the consent of all heirs shall be required.
(5) To add a rule permitting a taxpayer who agrees to create a mortgage in favor of the tax collection authority over taxable real property that meets the requirements under Article 11-1 of the Tax Collection Act to apply for a certificate of consent to transfer. The amendments also remove the provisions under the Estate and Gift Tax Act governing the imposition of delinquency charges and referral for compulsory enforcement in cases of late payment, such matters to instead be governed by the Tax Collection Act.
Reported by: Paul Hsu / Maggie Tsai
Financials
3.Draft Amendments to Money Laundering Control Act
On August 13, 2026, the Executive Yuan approved the draft amendments to “Money Laundering Control Act”. We summarize below:
(1) To add the offense under Paragraph 4, Article 6 of the Money Laundering Control Act and Paragraph 1, Article 48 of the Virtual Assets Service Act as specified crimes, so as to prevent virtual asset service providers (“VASPs”) or third-party payment service providers without completing the anti-money laundering and service capacity registration from becoming loopholes for money laundering crimes.
(2) To add the definition of beneficial owner, specifying that the term “beneficial owner” under the Act includes the natural person who ultimately owns or controls a customer, the natural person on whose behalf a transaction is conducted, and the natural person who exercises ultimate effective control over a legal person or legal arrangement.
(3) To amend the scope of applicable trust and company service providers by revising the type of transaction they prepare for, or carry out for, customers from “acting, or arranging for another person to act, as a beneficial shareholder” to “acting, or arranging for another person to act, as a nominee shareholder,” so as to align with the international standards under Recommendation 22 of the Financial Action Task Force on Money Laundering (FATF) and its glossary.
(4) To add methods for reviewing and identifying beneficial owners to the matters subject to the authorized regulations, and to provide penalties for violations of such requirements.
(5) To add a cross-agency information request and inquiry mechanism, specifying that relevant public agencies may, for the purposes of anti-money laundering and countering terrorism financing, request or inquire from the central competent authority, within the necessary scope, the list of financial institutions and designated non-financial businesses or persons that have been subject to administrative fines. The central competent authority for designated non-financial businesses or persons may also, for the purposes of anti-money laundering and countering terrorism financing, request or inquire necessary information from relevant public agencies.
(6) To add an inquiry mechanism among financial institutions and VASPs, specifying that, for the purposes of anti-money laundering and countering terrorism financing, they may make inquiries to other financial institutions or VASPs, and the party receiving such inquiry shall provide relevant information. The competent authority in charge of financial industries is authorized to prescribe the scope, items, procedures, and other compliance matters for such inquiries , so as to enhance real-time verification and risk control capabilities.
Reported by: Stacy Lo / Linda Guo
4.Draft Amendment to the Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises or Persons Providing Virtual Asset Services
On 13 August 2026, the Financial Supervisory Commission (FSC) issued a draft amendment to the “Regulations Governing Anti-Money Laundering and Countering the Financing of Terrorism for Enterprises or Persons Providing Virtual Asset Services” for public consultation. We summarize below:
(1) To revise the requirements for a VASP acting as the originating party to obtain the necessary information of the originator and beneficiary of the virtual asset transfer;
(2) To add an obligation for a VASP acting as the beneficiary’s VASP to verify the relevant information;
(3) Considering the practical operational needs of VASPs, to provide that the scope of application and implementation schedule shall be prescribed by the Taiwan VASP Association and submitted to the FSC for approval.
(4) To prescribe that the amended provisions of these Regulations shall take effect on the date of promulgation.
Reported by: Stacy Lo / Oscar Chung
5.Regulations on Other Financial Services Enterprise Announced by the Competent Authority under Paragraph 1, Article 3 of Financial Consumer Protection Act
On 25 August 2026, the FSC announced the “Regulations on Other Financial Services Enterprise Announced by the Competent Authority under Paragraph 1, Article 3 of Financial Consumer Protection Act”. We summarize below:
(1) 13 financial leasing companies are announced as financial services enterprises under Paragraph 1, Article 3 of the Financial Consumer Protection Act (“Act”) when engaging in purchasing accounts receivable, installment purchase and sale or business of similar financing nature with natural persons;
(2) The Act shall apply to the aforementioned businesses of financial leasing companies and the financial consumer disputes derived therefrom after the announcement becomes effective; and
(3) The effective date of the announcement shall be 15 September 2026.
Reported by: Stacy Lo / Zoe Chen
| Editors: Mike Lu (Partner) .Stacy Lo (Partner) Jeffrey Liu (Partner) Kang-Shen Liu (Partner) David Tsai (Partner) Angela Lin (Partner) Paul Hsu (Partner) | Counselors: Echo Yeh Sue Su Jolene Wang (Lexcel Partners IP Firm) |
