Supreme Administrative Court rules fees paid from Taiwan for services performed offshore is Taiwan source income

The Supreme Administrative Court has ruled that service fees paid from Taiwan (by Sun Microsystems) to affiliates in Australia and Singapore should be characterized as Taiwan source income and subject to withholding tax. The verdict is final and is not subject to further appeal.

Under Art. 8 of the Income Tax Act, which provides for the various categories of Taiwan source income, remuneration for services would be Taiwan source income under Category 3 (services…