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  • Interpretation
  • No.116
  • Date
  • 1966/09/30
  • Issue
    • Shall the interests included in the installment payments made to foreign businesses or manufacturers be subject to income tax withholding?
  • Holding
    •        If an installment plan to pay a foreign business or manufacturer contains interest, the interest payment is subject to tax withholding by the domestic person charged with withholding duty when making payments.
  • Reasoning
    •        Article 86, Paragraph 3, of the Income Tax Act, operative January 1, 1956, provided that a person receiving interest income shall be the taxpayer liable for that income. This tax liability is not limited to an individual. A business entity receiving interest income is taxable, too. As Article 85, Paragraph 1, of the same Act prescribed, a person charged with withholding duty is not exempted solely because the interest-receiving party is not an individual. Therefore, if an installment plan to pay a foreign business or manufacturer contains interest, the interest payment is subject to tax withholding by the domestic person charged with withholding duty when making payments.  
      
    • *Translated by Robert Huai-Ching Tsai.
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