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TAIWAN--Spenser Hor

Comments from Taiwan Group (pending further revisions)

I. Sales of Goods and Services

  1. Jurisdictional Law

As to the choice of law or jurisdiction issue for online sales of goods and services, the Law Governing the Application of Laws to Civil Matters Involving Foreign Elements in the Republic of China on Taiwan (Private International Law of Taiwan) may be applicable to the online transactions. Under Article 6 of said Private International Law, the first priority to determine the choice of law is the mutual intent of the transacting parties. If the parties’ intent is unclear in the agreement, then consider the nationality of the parties as the governing law. If the transacting parties are in different countries, then the governing law will be determined on the jurisdiction where the parties conducting the transaction. If there are different conducting places, then will use the place where the offer was issued or the place where the offeror resides.

However, the "place of the transacting conducts" could be very difficult to determine, especially in the cross border internet transactions in Taiwan. For example, the offeror (seller) may reside or incorporate in Japan, post a passive web page in Hong Kong and redirect (use the, for example) the web site to the server located in the United States to attract the business. In seller’s homepage, there is no clear statement/agreement regarding which jurisdiction will be the goods or services intend to transact. When the buyer resides in Taiwan viewed the web page (the buyer maybe viewing the web site in jurisdiction other than his/her own country), it is hard to determine the transacting jurisdiction. Even more complicated, once the buyer used his credit card to pay the consideration of the goods or services, he is unable to know the seller’s payment receiving bank is located in Canada. In this scenario which is normally used by the pornographic business, neither the above Taiwan Private Internal Law nor the US "minimum contact" jurisdictional test can provide a fair play solution to reach the substantial justice when dispute arises.

B. Existing Substantive Laws for Sales of Goods

As to the current substantive laws in Taiwan, there is no existing law regulating sales of goods either. Some commentators suggest that revisions or reinterpretation of certain provisions in the Civil Code or Consumer Protection Law ("CPL") and related regulations be made to accommodate the online situations. As to the warranty issues, Article 347 of Taiwan Civil Code states that "The provision under the present title apply matatis mutandis to such non-gratuitous contracts other than those of sale, unless ‘the nature of the contract’ does not permits of it." CPL and its Enforcement Rules further provide that the standard contracts should follow the principle of good faith and fairness, otherwise the contract will be deemed null and void. According to the Civil Code, Article 222, the general rule is that the liabilities of intentional or gross negligent conducts cannot be precluded in advance.

However, the nature of online digital products transacting via the internet will not be identical as the conventional sales of goods. In addition, to cause contracts legally binding, many laws in Taiwan require the contracts to be in writing and signed or chopped/sealed by the contracting parties. Therefore, before any legislation or case interpretation, the contracting parties should use unambiguous contract terms or statement contained in the home page to fairly allocate these uncertainties arising out of the cross-border issues.

C. Self-Regulating Guideline

In May 1999, a Self-Regulating Guideline for Electronic Commerce and Consumer Transaction has been proposed to avoid certain disputes addressed under the above scenario. In order to build the trust for the online transactions, Articles 4 and 5 of the drafted Guideline request the electronic business, in the web page, to honestly disclose information regarding the business identity and to provide the consumer complete and acquirable transaction information, including the price, nature, quality and sample of the goods, payment mechanism, contract formation of the online transmission, payment mechanism and delivery process, warranty and disclaimer, restrictions on refund or replacement, channels of complaints and other disclosure required by law.

D. Proposed Legislation

In order to facilitate online government and electronic commerce, Taiwan government sets forth a legislation agenda to implement its National Information Infrastructure ("NII"). The first priority in its agenda is to enact an electronic signature legislation to give legal effects of the electronic documents and electronic signatures in ascertaining the transacting parties and their mutual assents. One electronic signature act, Digital Signature Law, has been proposed by the Research, Development and Evaluation Commission ("RDEC") in the Executive Yuan since March 1998. The latest published version was released in November 1998 which contained 44 articles with heavy regulations on certification authorities. (See the draft of Electronic Signature Act, digital_sign/DIG/LAW/DOC). The fifth edition drafted on October 27, 1999 but was not officially released (the Current Draft) encloses 16 articles and is planned to submit to the Legislative Yuan in this session.

Article 2 of the Current Draft defines "electronic document," "electronic signature" as well as the "digital signature" and "certification authorities." Articles 3 and 6 further state that except certain circumstances, electronic documents may satisfy the legal transactions’ requirement and have the authentic legal effect as long as the security concerns are approved by the Governing Authority ("GA") or consented by transacting parties. Article 10 also states that electronic signature may be used together with the electronic document when the law or transaction requires the parties to sign or chop/seal on the document. In addition, as to the cross-certification issue, Articles 13 and 15 allow the foreign certification authorities to provide certificate service in Taiwan according to the approval of Governing Authority or the principles of International Reciprocity as long as the foreign certification authorities satisfy the security standard.

Before the RDEC submitting the Current Draft to the Congress, several legislators in the Democratic Progressive Party ("DDP") also respond another bill, containing 42 articles, specifically stressing on digital signature technology for consideration. Addressing more consumer protection concerns is the most attractive part of this bill. Article 17 states that the Certification Policy Statement ("CPS") shall be fair and reasonable and subject to GA’s review since the nature of the statement is similar to the "standard contract" stipulated in the CPL.

  1. Online Sales of Services

With regard to the online service issues, there is also no existing law in Taiwan regulating any online professional services, such as lawyers, doctors and tele-medicine prescription. In general, the foreign licensed professionals need a Permit/Certificate approved by specific Government Authorities to practice in Taiwan. The Permit/Approval process used to be very strict.

However, in order to expedite the join process of the World Trade Organization ("WTO"), certain laws has been revised in recent two years to allow foreign professionals’ practices. This change may become an alternative solution to future jurisdictional issues related to professional services. The recent revised Lawyer Law in 1998 is a good example. The new Lawyer Law now adds 14 sub-articles after Article 47 to allow foreign licensed attorneys and foreign law attorneys to practice laws in Taiwan subject to certain administrative conditions. This new trend eases the traditional political jurisdiction and may also provide a leeway for expecting revision on the Lawyer Law in accommodate with the arising online professional services issues.

II. Public Law: Gaming and Other Illegal Businesses

A. Introduction

As a powerful and borderless communication tool, internet can easily be used to conduct illegal business. Crimes committed on internet may incur a good number of new legal problems. For example, while country X allows sale of guns, can country Y which prohibits possession or sale of guns punishes a gun-seller (the buyer is a country Y citizen) through a web page registered in country X? Identical problems may arise in case of sale of medicine or alcohol that is legal in one country but illegal in another.

In Taiwan, gambling is illegal under the Criminal Code as well as other penal codes (collectively "Penal Codes"). Running casino is also prohibited by the Penal Codes. Said Codes also prohibit trade or sale of certain goods. Guns and weapons may neither be possessed, nor be traded. Drugs that are not approved by the medicine authority may be not sold. Obscene materials may not be displayed, traded, or circulated.

How will a sale of illegal product (as defined by Taiwan's Penal Codes) on internet be punished by Taiwan's courts? Must the web site be registered in Taiwan? Except the seller, will the internet service providers ("ISP") be also liable for seller's criminal conduct?

B. Jurisdictional Law

Under Taiwan's Criminal Code, a crime is punishable where the "site" of the crime is within Taiwan's territory. Furthermore, the "site" of crime is defined as the site where the criminal act is conducted or the site where the "effect" of the criminal act takes place. Namely, as long as an illegal item is sold to Taiwan (even though the web site is located out of Taiwan), it will be deemed punishable by Taiwan law.

C. Gambling: The "Dragon and Tiger Battle" case

A casino web site providing gambling services in Taiwan will be deemed violation of the criminal code even the web site is registered in a country out of Taiwan. In 1998, a web site named "Dragon and Tiger Battle" in Taiwan was busted for gambling offense. Via internet, the site re-transmitted a casino cable television channel located in the Philippines. The site successfully solicited many Taiwanese gamblers and attracted millions of wagers. Because the gambling "site" was located within Taiwan, the persons running the web site were prosecuted for criminal liability.

D. Sales of Weapons: The "Weapon God Father" case

In Taiwan, citizens are not allowed to possess or trade guns and other weapons. In 1997, a web site under the banner "Weapon God Father" was found to provide information and sale price of pistol "Beretta Tomcat .32" in Chinese. The site would receive orders from Taiwanese buyers. The site was registered in a server in the United States, not in Taiwan. The Taiwanese police still arrested the web person. The Taipei district court sentenced him five months in jail with a probation period of three years. The court noted that a web site not registered in Taiwan would not affect the jurisdiction of Taiwanese courts as long as the "site" of crime is within Taiwan or the "effect" of crime takes place within Taiwan.

E. Internet Service Provider's Liability

With respect to ISP’s liability, ISPs are normally held not liable for their client's criminal acts as long as ISPs are not aware of their client's behavior. However, ISPs are expected to exercise more attention to oversee the business activities of their client's home pages.

  1. Consumer Protection and Advertisements

A. Consumer Protection

As previously indicated, Taiwan’s Consumer Protection Law was enacted in 1994. Two major legal devices – strict liability and standard contracts - are provided in the CPL. For strict liability, the CPL imposes two legal responsibilities on the business operators who engage in design, manufacture or importation of goods or who provide services: (1) those business operators "shall ensure that the goods and services provided by them shall be free from any danger to safety or sanitation," and (2) those business operators shall provide a warning label and instructions for emergency treatment, where goods or services may endanger consumers' lives, health, or properties. In case of breach of these responsibilities, the business operators will be subject to strict liability and thus jointly and severally liable for damages sustained by consumers or third parties.

"Standard contracts," which consumers frequently encounter in regular transactions with firms such as telephone companies, transportation carriers, insurers and banks, are one of the main focuses of the CPL. The CPL creates a general protection that a clause in standard contracts shall be void if it is "apparently unconscionable to consumers" and against the principle of "good faith".

Will the CPL apply to transactions on internet? Theoretically speaking, sales of goods or services on internet are no different from regular sales in supermarkets or via mail order, the CPL shall apply to internet transactions if issues of any danger to safety or sanitation" involved. However, it is not settled whether all provisions in the CPL shall apply to all firms and transactions on the internet. For example, the meaning of "goods" in the CPL normally refers to tangible goods. Do digital data transmitted on the internet fall within the definition of "goods"?

Further, in the Article 23 of the CPL, it holds the "media operator" jointly liable with the firm, if the media operator publishes the firm's advertisement and the media operator is aware of or likely to know the advertisement is false. For this provision, it is problematic whether an ISP shall be deemed a "media operator" for the purpose of the Article 23 of the CPL.

B. Advertisements

Legally speaking, commercial advertisements are highly regulated in Taiwan. Two regulatory schemes may be summarized. First, certain products, such as cosmetic and pharmaceutical products, require prior approvals or permits to be advertised. Second, advertisements may not give false or misleading information. Under the new Fair Trade Law very recently amended, not only sellers, but also advertisement agents and media, are jointly liable for false and misleading advertisements.

For advertisements on the internet, whether the regulatory schemes (in particular the second scheme) would apply may become problematic. Should an ISP be seen as media and therefore liable for the false ads placed by its customers? Specifically, how possible is an ISP to have control or oversight over thousands of homepages produced by its customers?

C. Jurisdictional Law

The Taiwan Private International Law sets forth the basic rules for jurisdictional law. As indicated, according to Article 6 of said Law, for contracts and other juridical acts, both parties may select the law of a particular jurisdiction as governing law for their transaction by agreement. When there is no agreement, the governing law will be the law of the country where the contract is made. When the contract is made not within one country, the governing law will be the law of the country where the offer is issued. In applying Taiwan's statute on choice of law to cases of international sales by Taiwanese consumers over internet (e.g., a Taiwanese citizen orders a book from an internet bookstore such as "" in the U.S.), the following preliminary conclusion may be incurred. When both parties have not made any agreement on choice of law, the governing law will probably be the law of Taiwan. It is because the message (or mail) ordering a certain book sent by the Taiwanese consumer to Amazon will be deemed as an offer. In the case of absence of agreement on governing law, the law of the country where the offer is made shall govern the transaction.

IV. Data Protection

  1. Protection under Criminal Offences
  2. In recent years, the use of internet for electronic transmission of data has become very popular here; however, Taiwan's laws are silent in setting forth specific provisions for offenses against data protection under this context. In 1997, an amendment to Article 220 of the Criminal Code was enacted for a broader definition of document. "A writing or mark on a paper or on a thing which by custom or special arrangement is sufficient evidence of the intention therein contained shall be considered a document within the meaning of this chapter and hereinafter." Pursuant to the doctrine that criminal offenses should be strictly construed according to the law, the act of forging data on a network or altering electronic files may not be deemed sufficient to constitute an act of forgery under the law in order to remove this anachronism, Article 220 of the Criminal Code provides that electromagnetic records displayed through the action of a machine or computer, which are sufficient evidence of the intent therein contained, shall be considered a document. Electromagnetic records will be defined as any records intended for computer processing and stored in an electronic, magnetic, or other format not directly accessible to human perception. After this amendment, knowing alteration and forgery of data on a computer network will hence constitute an offense.

    Article 315 of Taiwan's Criminal Code further states that a person who, without reason, open or conceals a sealed letter or other sealed document belonging to another will be punishable under the law. As defined in the aforementioned Article 220, unauthorized perusal of somebody else's electronic mail would constitute an offense. Article 315-1 of Criminal Code sets forth the provision to punish unlawful fauceting or tapping; or photographing, phonographing, recording or making electromagnetic records of undisclosed activities, talk or conversation. If the wrongdoer of said Article 315-1 is with an intent to procure illegal benefit, or with intent to be communicated to the public such offences will be increased-up the punishments under Article 315-2.

    Article 316 of Criminal Code as it relates to the disclosure of trade secrets was not framed to regulate the internet. The control of information has gained increasing importance with the use of the internet and other computer networks, and it has therefore become necessary to supplement the relevant provisions. Article 318-1 of Criminal Code includes references to gaining knowledge of trade secrets through the use of a computer or related device, and the use of such for the disclosure of these trade secrets. Under Article 318-2 of Criminal Code, a person who commits any of offences specified in Articles 316 to Article 318, utilizing computer or related device, shall be subject to the punishment prescribed for such offence increased up to one half.

    As electronic data on a computer network do not have physical form and is not moveable property, it does not fall under the conventional interpretation of larceny. In order to extend the scope of larceny over data on computer networks electromagnetic records will be defined as a moveable and, therefore, subject to offenses of larceny in Article 323 of Criminal Code. Unauthorized use of a computer or related device will also be included under offenses of larceny.

    Under Article 339-3 of Criminal Code, in order that fraud perpetrated by means of the internet or other computer networks may be adequately covered by the Criminal Code, will be made to include any person who uses illegal methods to input false information or commands into a computer or related device, to infringe on copyright, to modify records or to appropriate the possessions of others.

    Under Article 306, Section 2, "A person who without reason conceals himself in the property specified in the preceding paragraph or refuses to leave up request shall be subject to the same punishment." The Criminal Code only covers breaking and entering with regard to a dwelling or other structure. A computer hacker might break into a computer system, and although he might not violate any other right or cause any damage therein, the simple act of breaking and entering is a violation of the freedom from interference that these provisions aim to preserve for houses and other physical premises.

    As information on a computer network is not presently regarded as a physical object, there is no simple way to punish the breaking and entering into a computer system, or introduction of computer viruses, and other means of damaging computer data, under offenses of damage and destruction. Under Article 352, Section 2 of Criminal Code, therefore, revised to include any person who, in a manner likely to cause injury to the public or to another, interferes with the processing of electromagnetic data, in the case of a computer virus, the knowing introduction of such a program with intent to cause damage to a computer system, would be prosecuted.

  3. Protection under the Trade Secret Law
  4. Taiwan’s Trade Secret Law was enacted in 1996. Any of improper measures that access to acquire trade secret will be treated as invasion of trade secret according to Article 10, Section 1. The word "improper measures" denoted the way of larceny, fraud, treat, bribing, infringement, to induce others to breach his obligation of secrecy, or other similar measures. Under Article 13, the compensation may up to triple of the proven loss.

  5. Protection under the Computer-Processed Personal Data Protection Law

There has been profusion of data managed by computer in Taiwan in recent years. Promulgated in 1995, the existing Taiwan Computer-Processed Personal Data Protection Law protects the rights to (1) search or read data; (2) reproduce data; (3) supplement or revise data; (4) stop further processing or use of data; and delete data. However, the Computer-Processed Persona Data Protection Law cannot comprehensively protect the consumer privacy because it only applies to businesses categorized with the eight types of non-public organizations. Although this legislation was not designed to anticipate the large volumes of data of online information accessing and transmitting in Taiwan, this law still requires extensive review in relation to its application in a computer network environment, with special reference to electronic data flow and offenses against privacy arising therefrom. In Article 1 of Computer-Processed Personal Data Protection Law, the Law was enacted in order to regulate offenses against human rights perpetrated through the wrongful use of computer-processed personal data, and to promote the proper use of such data. Only a natural person will be protected by this Law. The information about corporations or other legal entities is not covered. Personal data is defined as one's name, date of birth, personal identification number, and other information sufficient to identify a natural person. There are a number of important limitations in applying the personal data protection law to the internet. The Law states that collection, computer processing, or use of personal data by any organization, whether public or nonpublic, may be conducted only for a proper purpose or under certain conditions. The Law states that collection, computer processing, or use of personal data by any organization, whether public or nonpublic, may be conducted only for a proper purpose or under certain conditions. The structure of the internet makes it particularly easy for improper use of personal data to be made by individuals or legal entities. Although the matter of international transmission is raised in the Computer-Processed Personal Data Protection Law and under the Enforcing Rules, many new technologies are not sufficiently defined under the law at present.

V. Intellectual Property Right

  1. Trademark, Trade Name and Domain Name
  2. The Taiwanese internet user seems not well realize the importance of identity between trademark and domain name. The government as well as commercial entities apt to use abbreviation for the third top level of the domain name. Even by a wild guess, it is hardly guess that "oop" means "Office of President." In one case, 3 Moon Information Ltd. registered "" for the domain name. 3 Moon was not meant to utilize the fame of 3M but for the convenience sake. Due to certain disputes, said domain is placed on hold by Network Solutions, Inc. ("NSI") (now being regulated by the Internet Corporation for Assigned Names and numbers ("ICANN")). Internet users in Taiwan seem not aware of the importance of registering a brilliant Domain Name. On the other hand, there is no arbitraging existed in Taiwan.

  3. Copyright

Taiwan has already made a great effort to urge people the importance of the copyright and the severe penalty that may cause due to copyright infringement. Generally, the infringed is sentenced to prison from six months to a year and no parole will be granted. The first network-related case (re hope_net/hopenet.htm) in Taiwan was a criminal action brought against Chun-I Huang, the proprietor of the Taiwanese company Kai Hsun. A group of writers had claimed that their writings post to a BBS forum had been unlawfully downloaded by the defendant and used for commercial purpose. The defendant used the material to make a CD-ROM compilation that it offered as a free gift with a magazine published and sold by the company. The case was brought before the Taipei District Court. The court found the defendant guilty, stating that the use to which the material was put exceeded fair use or reasonable extent. The court sentenced the defendant to seven months imprisonment suspended for three years (Criminal Docket Su-Tz-No.-2341, 1995, Taipei District Court, Taiwan). The defendant appealed to the High Court and the Supreme Court. The appeal were thereafter reversed respectively (Criminal Judgment Zhan-Su-Tz-No.-4501, 1996, Taiwan High Court; Criminal Judgment Tai-Shan-Tz-No.-7267, 1997, Taiwan Highest Court).

Prosecutor brought another case to the Taipei District Court in 1997. The defendant Jeun-Shuo Lin was an engineer of Epson (Hong Kong). He left Epson for a Korean company in Taiwan the later days in 1994. Since he is familiar with the server user's name and password of Epson (Hong Kong), trespassed into the IC layout library of the server easily. The defendant distorted and garbled the blue print for the integrated circuit of a chip. A serious default was thus caused. The claimant Epson (Hong Kong) suit on a count of Copyright Law, since the Criminal Code was not revised yet that time. The claimant claimed that defendant conduct breached on account of the integrity of the computer program work. In said decision, the judge pointed out that the design was made by Epson (Japan) in 1992, not by the claimant Epson (Hong Kong). The copyright belongs to Epson (Japan) or Epson (Japan)'s engineer. The claimant was not entitled to bring a suit against the defendant on the basis of copyright, and the Court found no trial of that case (Yi-Tz-No.-470, 1997, Taipei District Court, Taiwan).

VI. Securities

As of present, there is no specific statutory law regulating the area of cybersecurities, such as offshore or internet offerings in Taiwan. The offering of securities is under the governance of corporate and securities related laws and regulations of Taiwan. The term of "Company" as defined in the Company Law of Taiwan states: A company is a corporate juristic person organized and incorporated in accordance with the law for the purpose of profit making. Articles 6 and 389 of Company Law requires that a company has to be incorporated at the office of central authority and be granted a corporate certificate/license in order to be formed.

As indicated in Article 19 of Company Law, business operations or other juristic acts may not be conducted in the name of a company whose incorporation has not been registered. Articles 161 and 161-1 further provide, within three months after its incorporation or alternation registration for issuance of new shares, a company then shall issue the share stocks/securities; without due incorporation or alteration of registration for issuing new securities, a company shall not issue stocks/securities. In the event that stocks are issued in violation of the aforesaid provision, such stocks shall be null and void. Therefore, if the offshore or internet securities are not issued by a company incorporated in Taiwan, no stocks can be issued here. Other special laws, such as Securities Law, or regulations, including the protection of electronic data also apply to the securities companies. In any event, Taiwan’s policy and guidelines in connection with cybersecurities, cross-border offering in particular, are yet to be formulated in the months ahead.

VII. Payment System/Banking

Taiwan has thus far lacked of the specific laws and regulations governing the transfer of cyber-cash. The web site of in addition to other position papers can provide an update of how this payment systems/banking area is developed and/or will be developed here. Basically, to-date e-banking operation in related to internet system contains the online by and among 1. local bank and its domestic branches; 2. local bank and its overseas branches; 3. cross local banks (through the web of Taiwan Ministry of Finance under; 4. domestic bank and foreign financial institutions (through SWIFT); and 5. Local banks and its customers.

In Taiwan, the banking services are rather limited as provided under the virtual banking, which mainly offers for the checking of balance online, current rate, financial accounting, investment inquiries and online account transfer of funds. The competent authority in charge for the financial electronic data interchange ("FEDI") is under the auspices of Financial Information Center, Ministry of Finance, which has adopted the FEDI international information standard of UNIEDIFACT in providing financial services to Taiwan customers. As to the security during the e-transfer of funds, the local banks and the Financial Information center will base on the contractual relationship to govern their rights and obligations. As far as the transnational transfer of fund, Articles 6 to 10 of Taiwan’s Law Governing the Application of Laws to Civil Matters Involving Foreign Elements will be applicable in the event that certain disputes or controversies may arise.

  1. Taxation

With respect to internet taxation, Taiwan has only limited to the application of the certification authority practice (pilot program) to online tax filing starting on February 17, 1998. (Among others, the related most current development can be found at Other internet taxation issues have not be regulated upon as of the date hereof. Basically, the Ministry of Economic Affairs of Taiwan supports the position for Internet Tax Freedom Act (See; netlaw/paper/8610andy.htm) as laid out in The White House’s position paper, entitling A Framework for Global Electronic Commerce on or about July 1, 1997 (http://www/

As to the current substantive taxation laws, there are thirteen taxes levied in Taiwan. Among such seven are direct taxes; income tax, land tax (agricultural land tax, land value tax, land value increment tax), estate and gift tax, mine concession tax, house tax, securities transactions tax and deed tax; while the remaining six are indirect taxes: customs duties, commodity tax, business tax, stamp tax, vehicle license tax, and amusement tax.

The above taxes can also be classified into three categories: (1) national taxes: customs duties, income tax (profit-seeking enterprise income tax, individual consolidated income tax), mine concession tax, estate and gift tax, commodity tax and securities transactions tax; (2) provincial (city) taxes: business tax ("VAT"), stamp tax and vehicle license tax; (3) prefecture (municipal) taxes: land tax (agricultural land tax, land value tax, land value increment tax), house tax, amusement tax and deed tax.

Each tax levied in Taiwan is based upon a different law. The research and planning of inland taxes and customs duties are the responsibility of the Taxation and Tariff Commission of the Ministry of Finance ("MOF"); the drafting, enactment and interpretation of inland tax codes and the supervision of the collection and administration of inland taxes are the responsibility of the Department of Taxation, MOF; and the collection of taxes is the responsibility of the national tax administrations and local tax offices in various prefectures and municipalities. However, the collection of customs duties is supervised and administered by the Department of Customs Administrations, Directorate-General of Customs, MOF, and all local customs offices respectively.

Appendix I:

Income Tax

Relevant Laws and regulations:

  1. Income Tax Law
  2. Regulation of Income Tax Law
  3. Statute for Upgrading Industries
  4. Standards Governing the Withholding Rates of Various Incomes

The income tax consists of individual consolidated income tax (personal income tax) and profit-seeking enterprise income tax (business income tax).

  1. Individual Consolidated Income Tax
  1. 01 General

Individual consolidated income tax is levied on income derived from sources in Taiwan by a Taiwan resident or non-resident individual. A resident is required to prepare and submit an income tax return for the payment of the tax. Collection of the tax from a non-resident is through withholding at source or by other procedures provided under the Income Tax Law.

Individual consolidated income tax is levied on a calendar basis. Income received by taxpayers, their spouses, and qualified dependents claimed in tax returns shall be consolidated. However, the tax payable on the wage income of a spouse is allowed to be calculated separately.

  1. 02 Resident and Non-resident Individuals

A resident individual in Taiwan means that:

    1. he/she is domiciled and ordinarily residing in Taiwan; or
    2. he/she is not domiciled but has resided in Taiwan for 183 days or more in a taxable year.

A non-resident individual in Taiwan means that he/she is not a resident in Taiwan, as defined in the preceding paragraph.

  1. 03 Taiwan-Source Income

Income derived from sources in Taiwan refers to the following:

  1. Dividends distributed by corporations registered under the Company Law of Taiwan or by foreign companies authorized to operate in Taiwan
  2. Profits distributed by cooperatives or partnerships in Taiwan
  3. Remuneration for services rendered in Taiwan, excluding that paid by an employer outside Taiwan to an individual not residing but staying in Taiwan for no more than 90 days during a taxable year
  4. Interest received from all levels of government agencies, legal entities or resident individuals in Taiwan
  5. Rental income from properties situated in Taiwan
  6. Royalties received for the use of patents, trademarks, copyrights, confidential formulas, and franchises utilized in Taiwan
  7. Gains from sale of properties situated in Taiwan
  8. Remuneration for services rendered by Taiwan government employees stationed abroad
  9. Profits derived from industry, commerce, farming, forestry, fishing, pasturage and mining
  10. Awards or prizes received from participating in contests, games or lotteries in Taiwan
  11. any other income received in Taiwan
  1. 04 Taxpayers

Any individual who receives income from a Taiwan source shall report and pay income tax. Individual taxpayers are divided into two categories, i.e. resident and non-resident taxpayers. Aliens and overseas Chinese are also characterized either as residents or non-residents for tax purposes. Taiwan source income received by aliens or oversea Chinese is taxed according to the status of the recipient.

    1. Non-resident aliens or overseas Chinese
    2. Aliens or overseas Chinese who reside in Taiwan for less than 183 days within a tax year are subject to a withholding tax at a fixed rate prescribed by regulations.

    3. Residence aliens or overseas Chinese

The income received by resident aliens or overseas Chinese in Taiwan together with the income paid by their foreign employers for services rendered in Taiwan shall be reported and taxed after deduction of personal exemptions and other deductions.

Appendix II:

Business Tax (VAT)

Relevant Laws and Regulations

  1. Business Tax Law (BTL)
  2. Regulation of Business Tax Law
  3. Rules Governing the Use of the Uniform Invoices

1.01 Scope and Taxpayers

According to Article 1 of the BTL, business tax shall be levied upon the supply of goods and services within the territory of Taiwan as well as upon imported goods. In other words, any transaction of goods or services within the territory of Taiwan, including importation of goods, is subject to business tax.

The business tax liability is imposed on the following taxpayers:

  1. A business entity which supplies goods or services;
  2. A consignee or holder of imported goods; and
  3. A recipient of services supplied by a foreign enterprise, organization, institution or association, which has no permanent business establishment within the territory of Taiwan and appoints a local agent, who shall hold the status of a taxpayer.
    1. Tax Base

The tax base consists of the total amount of sales of goods or services when they are sold or rendered to buyers.

1.03 Uniform Invoices

    1. The forms and the rules governing the use of uniform invoices shall be prescribed by the MOF.
    2. A business entity is obliged to issue and deliver uniform invoice to the buyer upon effecting a sale.
    3. Uniform invoices are printed by the government for sale to business entities. However, some business entities can print their own invoices under the approval of the MOF.
    4. Small businesses whose total monthly turnover averages below the standard set by the MOF may be excluded from using uniform invoices and, instead, may use an ordinary receipt.
    1. Zero-Rating and Non-Credit Exemption
    1. The business tax rates shall be zero for the sales of goods or services of the following items:
    1. Export of goods
    2. Services related to exports or services supplied within the territory of Taiwan but used in foreign countries
    3. Goods sold to outbound or transit passengers at the tax-free shops set up according t the law
    4. The sale of machinery and equipment ,material, supplies, fuel and unfinished goods to export enterprises inside a duty-free export processing zone, to enterprises inside the Science-based Industrial Park, or to bonded factories or bonded warehouses supervised by the customs house
    5. International transportation, with the proviso that foreign transport enterprises engaged in international transportation with in the territory of Taiwan shall qualify for the zero tax rates only if reciprocal treatment, or exemption from similar taxes, is given to the international transport enterprises of Taiwan by the foreign country in which it is incorporated
    6. Vessels and aircraft used in international transportation and deep sea fishing boats
    7. The sales of goods and maintenance services to vessels and aircraft used for international transportation and deep sea fishing boats
    1. The sales of the following goods or services are exempted without credit for business tax previously paid:
    1. The sale of land
    2. The water supplied to farmland for irrigation
    3. The medical services, medicine, ward lodging and meals provided by hospitals, clinics and sanitariums
    4. The rearing and nursing services offered by nursing homes for children, the elderly, or handicapped
    5. The education services offered by schools, kindergartens, and other educational and cultural institutions including cultural services offered under government’s consignment
    6. Textbooks issued by the publishing industry and authorized by education authorities for use at various levels of schools and important specialized academic writings legally awarded by the government
    7. The goods or services sold by student-run shops of vocational schools which do not serve outsiders
    8. Newspapers, magazines, newsletters, advertisements, television and broadcasting programs produced and sold by legally registered newspaper and magazine publishers, news agencies, and television and broadcasting stations, excluding the advertisements sold by newspaper publishers and advertisements broadcast by television stations
    9. The goods or services sold to their members by cooperatives managed in accordance with the law; and business consigned by government to said cooperatives
    10. The goods or services sold by farmers’, fishermen’s workers’, commercial and industrial associations to their respective members in accordance with the law; and business consigned by government to said associations
    11. The proceeds from goods sold in tenders, charity sales and charity shows held by charity and relief institutions organized according to the law, provided that the total proceeds are solely used by said institutions after deducting the necessary expenditures for the tenders, charity sales and charity shows
    12. The goods or services sold by employee welfare organizations of government bodies, state enterprises and social organizations which are organized and operated under relevant laws and are not open to the public
    13. The goods or services sold by prison workshops and their finished goods stores
    14. Services rendered by post and telecommunication offices in accordance with the law, and business consigned under government mandate
    15. Monopoly goods sold at statutory prices by state-owned monopoly industries and by business entities which are authorized to sell such monopoly goods
    16. The service of consigned sales of stamp tax tickets and postage stamps
    17. The goods or services sold by peddlers or street vendors
    18. Feed and unprocessed raw agricultural, forestry, fishing and livestock products, and their by-products
    19. The fish caught and sold by fishermen
    20. The sales of rice and wheat flour and the service of husking rice
    21. The sales of fixed assets which are not regularly traded by business entities which compute their business tax according to Section 2 of Chapter 4
    22. Insurance policies accepted by the insurance enterprises for insurance promoted by the government, covering military, government and educational entities and their dependents, laborers, students, farmers, fishermen, exports, and compulsory automobile third party liability insurance, and reinsurance premiums paid out by insurance enterprises from premiums received by the same, and life insurance policy reserves, annuity insurance policy reserves and health insurance policy reserves, provided, however, that this does not include income, other benefits and return of policy reserves received on termination of life insurance, annuity insurance and health insurance
    23. The bonds issued by all levels of government and securities upon which a securities transactions tax has been imposed in accordance with the law
    24. Residual or obsolete goods sold at tenders by all levels of government
    25. The sales of weapons, warships, aircraft, tanks and reconnaissance communication equipment for military use to defense agencies
    26. Fertilizer, pesticides, veterinary drugs, agricultural machinery, transportation equipment for farmland, and fuel and electricity used by such machinery and equipment
    27. Fishing boats for coastal or inshore fishery, as well as machinery, equipment, nets and fuel used by fishing boats
    28. Interest on the flow of funds between head and branch offices of banking enterprises, the revenue of trust and investment enterprise derived from trust funds in the manner designated by the trustor, provided the trustor bears the risk of loss and enjoys the proceeds, and unredeemed items where the proceeds arising form their sale by pawnshops do not exceed the aggregate of principal and interest receivable
    29. Gold bars, gold bricks, gold foil, gold coins and gold ornaments, but the processing services are not included
    30. The research services supplied by scientific or technological institutions which are established under approval from the government
    31. The sale amount of operating financial derivatives, corporate bonds, financial bonds, New Taiwan Dollar interbank call loans and foreign currency call loans; however, commissions and service charges of these products are not included

Any business entity, which sells any aforementioned, exempted goods or services can apply to the Ministry of Finance for the approval of waiving the exemption and compute its business tax according to the provisions of Section 1 of Chapter 4 of the Business Tax Law. However, once approved, no changes can be made within three years.

    1. Importing any one of the following items shall be exempted from business tax:
    1. Vessels and aircraft used in international transportation and deep sea fishing boats
    2. The goods stated in Article 26 of the Customs Law, provided, however, that where transfer of ownership or change in use of said goods results in payment of customs duties under Article 31 of the Customs Law, the business tax so exempted will become due.
    3. National ancient curios or remains
    4. Gold bars, gold bricks, gold foil, gold coins and gold ornaments
    1. Tax Rate

In conformity with Article 10, 11 and 12, the business tax rates which apply respectively according t business categories are listed as follows:

    1. The business tax rate for banking enterprises, insurance enterprises, trust investment enterprises, securities enterprises, short-term commercial paper enterprises, and pawn shops shall be five percent; however, the revenue from reinsurance premiums shall be taxed at one percent.
    2. The business tax rates for enterprises engaged in special beverage and food services are further classified as follows:
    1. Fifteen percent for nightclubs or restaurants providing entertainment
    2. Twenty-five percent for saloons or tearooms, coffee shops and bars offering female companionship
    1. The business tax rate for traders in the wholesale agricultural market and small businesses supplying agricultural products is 0.1%.
    2. For small businesses, and other business entities, which are excluded by the Ministry of Finance from reporting their transactions, the business tax rate shall be 1%.
    3. The business tax rate for business entities other than that listed above, namely VAT business entities, shall be no more than 10% and no less than 5% subject to prescription by the Executive Yuan. The current applicable tax rate is 5%.

Business entities classified in categories (1) to (4) shall calculate their tax liability by gross receipts with no credit according to Section 2, Chapter 4 of the Business Tax Law, while VAT business entities shall calculate their t ax liabilities by offsetting their output tax against their input tax according to Section 1 of the same Chapter.

Appendix III:

Securities Transactions Tax (STT)

1.01. Tax Base

The tax base shall consist of transactions of bonds, shares, share certificates or corporate debentures issued by companies, and any other securities opened for subscription after having been approved by the government.

1.02. Taxpayer

The tax shall be paid by the seller of securities but collected through the tax agents who are sales agents, brokers, of transferees in case of direct transactions.

1.03. Tax Rates

The tax shall be calculated at the following rates for each securities exchange transaction price:

  1. 0.3% of the share certificates issued by companies
  2. 0.1% of the corporate bonds or any securities offered to the public and duly approved by the government

1.04. Exemptions

All government bonds and treasury bills are entitled to exemption from the STT.

The following types of securities are also entitled to exemption from the STT:

  1. Any new shares issued by a new company or by a company in connection with its capital increase
  2. Any corporate bonds initially issued and offered to the public, which have been duly approved by the competent authority
  3. Any securities acquired by inheritance or gratuitous transfer.


The Internet Commerce Automation Project, Draft of Self-Regulating Guideline for E-Commerce Providers (Chinese Version) , available at (May 27, 1999).

Science and Technology Law Center of Taiwan,

Research, Development and Evaluation Commission, Draft of ROC Electronic Signature Act (Chinese Version published in November 1998), available at (Dec. 10, 1998).

Research, Development and Evaluation Commission, Draft of ROC Electronic Signature Act (Chinese version on October 27, 1999), presented at the "Digital Signature Law Public Hearing" held at the Legislative Yuan on October 28, 1999.

Office of Legislator Zhen-Bao-Chin, Draft of Digital Signature Bill, presented at the "Digital Signature Law Public Hearing" held at the Legislative Yuan on October 28, 1999.

Chi-Min Yu, "Law of Electronic Commerce in Taiwan, China and the US," final draft of the SJD dissertation (expected 1999).

Guanfu Guo, "Auxian xuni shijie de feixing shouze – tan wanlu fanzuei yu wangji wanglu nerong zhi guanli" [The flight rules in soaring the cyber world – on the regulation of internet crimes and internet content], gec/news58.htm (visited Sep. 13, 1999).

Yawen Zhang, "Wangji wanglu lianxia fuwu tigozhe jiu wanglu weifa neirong zhi falu zeren (shan)" [The legal liability of internet service providers in regard to illegal web content (Part. I)], (visited Nov. 13, 1999).

Yawen Zhang, "Wangji wanglu lianxia fuwu tigozhe jiu wanglu weifa neirong zhi falu zeren (zhong)" [The legal liability of internet service providers in regard to illegal web content (Part. II)], (visited Nov. 13, 1999).

Yawen Zhang, "Wangji wanglu lianxia fuwu tigozhe jiu wanglu weifa neirong zhi falu zeren (xia)" [The legal liability of internet service providers in regard to illegal web content (Part. III)], (visited Nov. 13, 1999).

Zheng-yu Feng, "Lun wanglu shuanyehhua so mianlin de guanxiaquan wunti (shan)" [On the question of jurisdiction with respect to the commercialization of internet (Part. I)], Zixuen fawu touxi, pp.18-34 (September 1997)

Zheng-yu Feng, "Lun wanglu shuanyehhua so mianlin de guanxiaquan wunti (xia)" [On the question of jurisdiction with respect to the commercialization of internet (Part. II)], Zixuen fawu touxi, pp.11-21 (October 1997)

Zheng-yu Feng,"Lun wangji wanglu yu xiaofeizhe baohu wenti (shan)" [On the problem of internet and consumer protection (Part. I)], (visited Nov. 13, 1999)

Zheng-yu Feng,"Lun wangji wanglu yu xiaofeizhe baohu wenti (xia)" [On the problem of internet and consumer protection (Part. II)], (visited Nov. 13, 1999)

Reinhard Schu, "Consumer Protection and Private International Law in Internet Contracts," (visited Sep. 4, 1999).

Manual of Cyber-Cash, HiTrust,

Financial Information Center, Ministry of Finance, Taiwan,

Pioneer Project of Taiwan SET Electronic Commerce,; E-Commence web site under Industrial Research Institute of Taiwan, URL:

Kuo Yun, New Face of the Enterprises under the Era of Electronic Commerce (1997),


Web site of Taiwan NII, URL:

Web site of Taiwan’s Ministry of Economic Affairs, URL:; web site of the internet commercial applications under MOEA, URL:; web site of e-commence alliance under MOEA, URL:; MOEA global information web, URL:

Related E-Commence web sites in Taiwan: URL:; URL:; URL:; URL:; URL:; URL:; URL: URL:; URL:; URL:; URL:;

Intellectual Property Office, Ministry of Economic Affairs,

Working Committee of Intellectual Property Rights,

Web sites of Taiwan leading law firms are hereunder provided:;;;;;;;;

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