Eastern Crypto Island: Taiwan's Cryptocurrency Asset Taxation and Regulatory System
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Eastern Crypto Island: Taiwan's Cryptocurrency Asset Taxation and Regulatory System
Taiwan region of China demonstrates a stance toward crypto assets that is both open and cautious.
Navigating Web3 tides with focused insightsAuthor: FinTax
1. Introduction
Taiwan's stance on crypto assets reflects a balance between openness and caution. In recent years, the use and trading of crypto assets in Taiwan have gradually increased, with growing participation from financial institutions and related enterprises. Recognizing the highly speculative nature of crypto assets and their potential risks for money laundering and terrorist financing, Taiwan has taken progressive steps to improve its regulatory framework. The Financial Supervisory Commission (hereinafter "FSC") actively promotes standardized management of Virtual Asset Service Providers (VASPs) by issuing policies responsive to market dynamics. On taxation, the Taiwanese government is progressively clarifying its tax policies on crypto assets—avoiding excessive market interference while striving to provide a fair and transparent tax environment.
2. Taiwan's Basic Tax System
Taiwan has a total of 19 taxes, classified into two tiers based on revenue rights: national taxes and local taxes (municipal and county/city taxes). According to current tax regulations in Taiwan, all national taxes are administered by the National Taxation Bureau, except customs duties, which are collected by the Directorate-General of Customs under the Ministry of Finance. Local taxes are managed by the tax authorities of respective municipal or county/city governments. This article briefly outlines income tax, business tax, and securities transaction tax as they relate to crypto assets, summarized below.
2.1 Income Tax
The Income Tax Act is the primary legislation governing income taxation in Taiwan. It divides income tax into two categories: Comprehensive Income Tax and Profit-Seeking Enterprise Income Tax. Taiwan’s Comprehensive Income Tax is comparable to individual income tax in mainland China, levied on individuals’ various types of income over a specific period (typically one year), including salaries, interest, dividends, rental income, and property transaction gains. The tax base is the taxpayer’s annual net comprehensive income—the total income minus exemptions, deductions, and special deductions. Resident taxpayers must file their annual comprehensive income tax return between May 1 and May 31 of the following year, combining the income, exemption amounts, and deductible amounts of their spouse and dependents.
Comprehensive Income Tax uses a progressive rate structure with four brackets: 5%, 12%, 20%, 30%, and 40%. Additionally, per the Income Tax Act, the amount of personal exemptions, standard deductions, special salary deductions, disability deductions, tax brackets, and lump-sum retirement income exemptions are adjusted upward whenever the Consumer Price Index increases cumulatively by 3% or more compared to the last adjustment year. In 2025, the comprehensive income tax exemption in Taiwan is set at NT$97,000.
Taiwan’s Profit-Seeking Enterprise Income Tax is analogous to corporate income tax in mainland China, imposed on the profit earned by taxpayers during an accounting year. However, its scope extends beyond corporations to include sole proprietorships, partnerships, and cooperatives. Under Taiwan’s Income Tax Act, any profit-seeking enterprise operating within Taiwan—including state-run, privately run, or joint public-private ventures—with a business name or operational premises engaged in industry, commerce, agriculture, forestry, fisheries, animal husbandry, mining, metallurgy, or other profit-seeking activities must pay Profit-Seeking Enterprise Income Tax. The tax base is the net profit, calculated as total annual revenue minus costs, expenses, losses, and taxes.
For tax rates, annual taxable income up to NT$120,000 is exempt; income between NT$120,000 and NT$200,000 is taxed at 50% (only on the amount exceeding NT$120,000); and income above NT$200,000 is taxed at 20%.
2.2 Business Tax
The Value-Added and Non-Value-Added Business Tax Act (hereinafter "Business Tax Act") is the foundational law for business tax in Taiwan. It categorizes business tax into value-added and non-value-added types, applying to the sale of goods, provision of services, and importation of goods.
Taiwan’s value-added business tax is levied on the added value generated during the sale of goods or services—essentially taxing the difference between input and output. The current rate is 5%. Starting in 2025, the threshold is NT$50,000 for services and NT$100,000 for goods. The Business Tax Act also includes special provisions regarding zero-rated items, foreign vendor refunds, exemptions from value-added business tax, and refunds for excess tax payments. Unless otherwise specified, business operators must file sales revenue and payable or excess business tax returns every two months, submitting them to the competent tax authority within 15 days after the start of the next period, regardless of whether sales occurred.
Taiwan’s non-value-added business tax, also known as gross-type business tax, taxes the gross amount of sales of goods or services. As stipulated in the Business Tax Act, this applies to financial institutions, specialized food service businesses, small-scale businesses, and other businesses exempted from sales reporting by the Ministry of Finance. These entities file returns every two months. If there is a tax liability, payment must be made to the treasury first, followed by submission of the payment receipt along with the return. Small-scale businesses and those exempted from sales reporting have their tax amounts assessed by the tax authority and receive a tax payment notice every three months.
2.3 Securities Transaction Tax
The Securities Transaction Tax Regulations form the basis for levying securities transaction tax in Taiwan. This is a transaction tax imposed on the seller based on the transaction price. The taxable scope covers securities, including bonds issued by governments at all levels, stocks and corporate bonds issued by companies, and other securities approved for public offering. Tax rates are 3‰ for stocks issued by companies and instruments representing stock rights, and 1‰ for corporate bonds and other government-approved securities.
3. Overview of Taiwan's Crypto Asset Taxation and Regulatory Framework
3.1 Classification of Crypto Assets in Taiwan
In Taiwan, the scope of crypto assets aligns with that of virtual assets. This article uniformly uses the term "crypto assets" while preserving the original names used in relevant regulations. Crypto assets in Taiwan are classified as either securities or virtual goods—two classifications that are not mutually exclusive. The classification as securities originates from an FSC order issued in 2019, designating crypto assets with securities characteristics as securities. The criteria for securities characteristics include: “transferability,” “investment by contributors,” “originating from a common enterprise or plan,” “expectation of profit by investors,” and “profits primarily dependent on the efforts of the issuer or third party.” Crypto assets are defined as “value represented using cryptography, distributed ledger technology, or similar technologies, capable of being stored, exchanged, or transferred digitally.” In a press release issued by the FSC in 2024 titled “FSC Urges Public to Carefully Assess Risks of Virtual Asset Trading,” crypto assets are described as “highly speculative digital virtual goods, not currencies, without intrinsic value, and without limits on price fluctuations.” We interpret these two definitions as follows: ordinary crypto assets fall under virtual goods, while those exhibiting securities characteristics are classified as securities.
3.2 Overview of Taiwan's Crypto Asset Taxation System
3.2.1 Income Tax
Both individuals and enterprises must pay income tax on gains from crypto asset transactions, and losses from such transactions may be deducted before tax. Specifically, ordinary enterprises calculating income tax on crypto assets should follow general accounting principles, treating transaction gains as revenue, aggregating them annually, and computing tax liabilities according to Taiwan’s tax laws. Crypto asset exchange platforms calculate income tax based on service income (platform fees and trading commissions) minus costs and expenses, a method similar to traditional service industries. For individual investors, gains from crypto asset transactions must be included in property transaction income for income tax calculation.
In practice, tax authorities only have access to inflow and outflow funds, lacking detailed transaction records. Unlike centralized securities markets where purchase and sale prices and quantities are clearly tracked, tax authorities cannot precisely calculate gains for each transaction. Therefore, income from crypto asset transactions is recognized only when funds are withdrawn from exchanges to investor accounts, and cost is determined solely by the amount of funds deposited—i.e., the initial capital transferred from the investor’s account to the exchange. This method presents issues—for example, when not all crypto assets are sold, there is no official guidance on how to determine the cost of disposed assets: whether through specific identification, FIFO (first-in, first-out), or weighted average methods.
3.2.2 Business Tax
Frequent buying and selling of cryptocurrencies often involves business tax obligations. The Sales Tax Division of Taipei’s National Tax Bureau responded in an online forum: “Ministry of Finance Order No. 10904512340 dated January 31, 2020: (2) Individuals engaging in virtual currency transactions via the internet should have the nature of the currency assessed on a case-by-case basis. If treated as a general digital good (or service) and monthly sales reach the business tax threshold (NT$100,000 for goods), tax registration and business tax payment are required per the aforementioned rules. If it functions as a payment tool, it falls outside the scope of business tax. Thus, when crypto assets are sold as general digital goods or services and meet the threshold, business tax applies.”
Specifically, if the seller is a Taiwan-based commercial entity, a 5% value-added tax applies to revenue. If the seller is an individual in Taiwan, they must register for tax purposes and pay 5% VAT unless monthly sales remain below NT$50,000. Crypto asset exchange platforms must pay 5% business tax on all service fees collected.
3.2.3 Securities Transaction Tax
Crypto assets with securities attributes are subject to securities transaction tax. Security Token Offering (STO) regulations in Taiwan are relatively well-developed. Issuers must comply with special crypto asset regulations such as the “Guidelines on Information to Be Disclosed in Public Offering Circulars for Virtual Currencies with Securities Characteristics Traded at Securities Firms’ Premises,” and the “Regulations Governing Securities Firms Engaging in Self-Trading of Virtual Currencies with Securities Characteristics,” as well as general securities regulations including the Securities and Exchange Act, the “Standard Specifications for Internal Control Systems of Securities Firms,” and the “Standards for Premises and Equipment of Securities Firms and Securities Trading Assistants,” to conduct STO operations.
According to Ministry of Finance Order No. 10900005070 issued in 2020: “Virtual currencies with securities characteristics, with fundraising amounts not exceeding NT$30 million and complying with GreTai Securities Market Center regulations, are considered ‘other securities approved for public offering’ under Article 1, Paragraph 2 of the Securities Transaction Tax Regulations, and their transactions shall be subject to a 1‰ securities transaction tax under Article 2, Paragraph 2 of the same regulations.” This clarifies the securities nature and tax treatment of STOs. Furthermore, since STO transactions fall under the scope of securities covered by the Securities Transaction Tax Regulations, their gains are exempt from income tax under Item 1, Article 4 of the Income Tax Act.
3.3 Taiwan's Crypto Regulatory Framework
Taiwan currently lacks a comprehensive legal framework for cryptocurrency regulation but is actively developing relevant laws. From an anti-money laundering perspective, the current regulatory framework centers on the “Regulations on Anti-Money Laundering and Counter-Terrorist Financing for Virtual Currency Platforms and Trading Businesses” (hereinafter “AML Regulations”). Under these regulations, Taiwan’s Executive Yuan has designated the FSC as the lead AML supervisory authority. Aligned with international standards set by the Financial Action Task Force (FATF), the AML Regulations focus on preventing money laundering and terrorist financing. Regulatory requirements include strict Know Your Customer (KYC) procedures, ongoing monitoring, large transaction reporting, suspicious transaction reporting, internal controls, and audits. Virtual currency platforms and trading businesses must comply with these rules to legally offer crypto asset services in Taiwan. Individuals and legal entities providing such services without completing AML registration with the FSC face severe penalties.
Regarding safeguarding crypto asset funds (e.g., protection against theft or loss), Taiwan is transitioning from industry self-regulation to public oversight. Prior to 2023, fund security management was the responsibility of industry participants, who followed voluntary guidelines such as the “Key Points of Information Security Standards for the Virtual Currency Industry” established by the private-sector “Bitcoin and Virtual Currency Development Association,” and implemented fund security measures in line with ISO/IEC 27001 international information security management system requirements, preferably obtaining certification under these or other international standards. Subsequently, following directives from Taiwan’s Executive Yuan in March 2023, the FSC assumed responsibility as the supervisory authority for “virtual asset platforms with financial investment or payment functions,” planning a phased strengthening of oversight over crypto asset platforms. In September 2023, the FSC announced the “Guiding Principles for Regulating Virtual Asset Platforms and Trading Businesses (VASPs)” (hereinafter “Guiding Principles”) to guide compliant operations. Building upon the AML Regulations, the Guiding Principles regulate VASP business conduct: they restrict VASPs from issuing stablecoins, offering derivative financial products based on crypto assets, or operating securities-related crypto asset businesses without authorization. Additionally, the Guiding Principles establish public oversight mechanisms concerning issuance and delisting reviews, segregation of VASP and customer assets, and internal rules, systems, and mechanisms (such as consumer complaint channels), focusing on fund security.
4. Conclusion and Outlook
Taiwan’s tax and regulatory policies on crypto assets are gradually moving toward standardization and transparency. Currently, Taiwan treats crypto assets as both economically valuable virtual goods and securities, establishing a flexible tax framework. Meanwhile, the FSC strengthens oversight of crypto asset platforms through regulations such as the AML Regulations and the Guiding Principles, focusing on anti-money laundering, fund security, and investor protection.
Looking ahead, Taiwan’s crypto asset regulation will further advance toward legalization. It has been confirmed that the FSC has included “formulating a dedicated VASP law to effectively regulate VASP market behavior and enhance investor protection mechanisms” as a key policy priority for 2025, aiming to complete the draft law in the first half of 2025 and submit it to Taiwan’s Executive Yuan. Simultaneously, the FSC is expanding custody services for crypto assets and began accepting applications for pilot programs from January 1, 2025, with approved operators to be publicly announced after review. As regulation improves, Taiwan may introduce more detailed tax policies to resolve current disputes—such as methods for calculating transaction costs—thereby influencing trading behaviors and investment models in the crypto market.
Overall, Taiwan’s policies in the crypto asset space are advancing toward greater systematization and international alignment, providing investors with a safer trading environment and laying a solid foundation for industry innovation and sustainable development. With the implementation of a dedicated VASP law and optimized tax policies, Taiwan is poised to assume a more prominent role in Asia’s crypto asset market.
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