The main contents of the income tax reform apply from 2018 and are as follows:
 

1. Relieve the tax burden on salary earners, middle- and low-income earners, and taxpayers who have children. The amount of four deduction items of individual income tax have been raised: the standard deduction, the special deduction for wage income, the special deduction for the disabled, and the special deduction for pre-school children.
 

2. The highest individual income tax rate has been reduced from 45% to 40%. This will be helpful for enterprises to attract professionals to stay in Taiwan, enhance the willingness to invest, and improve international competitiveness.
 

3. Enhance the willingness to invest and create employment opportunities.
 

3.1 We have adopted a new dividend tax regime by abolishing the partial imputation tax system on dividends. As a result, by combining the profit-seeking enterprise income tax with the individual income tax on dividends, the top aggregate tax burden (including profit-seeking enterprise income tax and individual income tax) has been reduced from 49.68% to 42.4% (= 20% + 80% × 28%).
 

3.2 The tax rate of the profit-seeking enterprise income tax has been raised from 17% to 20%, which is lower than the average tax rate of 23.5% of OECD countries. It still benefits enterprises to operate competitively around the world and helps the government to maintain a sound fiscal position.
 

3.3 In addition to the above adjustments, we have reduced the surtax rate on undistributed earnings of companies from 10% to 5%. Reducing the aggregate tax burden on an enterprise’s retained earnings will allow some relief from the tax burden as well as promote enterprises to accumulate capital to finance the needs of innovation and upgrading in the future.
 

4. Simplify the tax system in line with international trends.
 

By abolishing the partial imputation tax system on dividends, we have deleted the provisions regarding the imputation credit account that profit-seeking enterprises shall maintain, record, and calculate, as well as related penalties.