In a public hearing attended by the American Chamber of Commerce, European Chambers of Commerce and Industry, and four major certified public accounting offices on July 22, 2009, the Ministry of Finance of Taiwan (ROC) made a lenient and favorable interpretation of the term "income from sources in the Republic of China" used in the Article 8 of Income Tax Law. As a result, those foreign businesses that are not keeping fixed business places or representatives in Taiwan will enjoy exemption from taxes on their income generated from services rendered outside this country. For income having a source in Taiwan, in most cases foreign businesses are also allowed to request a deduction of cost and expense in calculation of the payable income tax and thus to mitigate their tax burden. A summary of some important resolutions obtained during the hearing is given below:

1. If the service is rendered totally outside this country by the foreign business, it will not be deemed a source in the Republic of China. If it is performed partly inside and partly outside the territory of Taiwan, the tax authority will try to make a distinction by the respective devotion of each part. Only those incomes that can be clearly attributed to a source in Taiwan will be taxable. The new rule changes the previous practice of imposing 20% withholding tax just because the service “is used” in Taiwan.

2. Even though some items of income have a source in Taiwan, such as sales of standardized software or processing the downloaded software into CDs, they may be deemed as acts of importation/exportation falling into the category of “general international trade” and therefore free from 20% withholding tax or other tax duty.

3. For those items of income, such as remuneration of services, rentals, business profits, and “other incomes”, the foreign businesses may prove their actual costs and expenses and the deduction be applied to their net-income, which will then be subject to income tax.