With an aim to avoiding double taxation, improving the investment environment for Taiwan, and increasing the attractiveness of foreign investment into Taiwan, the Ministry of Finance in recent years has focused on entering into tax treaties with other jurisdictions. Following tax treaties signed with Italy and Austria, Taiwan entered into a tax treaty with Italy, which is the 29th comprehensive income tax treaty that the Taiwan government has entered into. Pursuant to Article 30 of the Taiwan- Italy Tax Treaty (the "Treaty"), the Treaty shall have effect: (a) in respect of taxes withheld at source, to income received as from 1 January 2016; and (b) in respect of other taxes on income, and taxes on capital, to taxes chargeable for any taxable year beginning from 1 January 2016.

The Treaty consists of 30 articles. The tax relieves under the Treaty which impact both countries' economy, trade, investment and technology include those on business profits, dividends, interests, royalties and income from securities transactions. Since the Treaty was based on the OECD and UN Model Tax Conventions, the tax relieves provided under the Treaty are generally the same as those under the other tax treaties that Taiwan had signed. In short, starting from 1 January 2016, a Taiwan tax resident that generates (i) income in Italy that is subject to withholding tax at source, such as dividends, interests and royalties, a reduced withholding tax rate of 10% will apply; and (ii) income in Italy that falls into the category of business profit, tax exemption will apply, provided that the Taiwan tax resident has no permanent establishment in Italy. If it has a permanent establishment in Italy, it will be subject to Italian income tax for the portion of the income that is attributable to the permanent establishment.