From 21/05/2021, in order to promote the development of arts and cultures industry, the income from transactions of individual artworks approved by Taiwan Ministry of Culture is allowed to proceed separate taxation for deduction.

First of all, the company shall submit an application to Ministry of Culture before holding the event by one month. From the statement issued by Taxation Bureau, the arts and cultures industries approved by Ministry of Culture which hold an exhibition and auction can submit an application to Ministry of Culture to assign the practitioners themselves to be the taxpayers in accordance with “Culture and the Arts Reward and Promotion Act”. That is, the practitioner can apply to the effective taxation rate in 6%, pursuant to taxation rate in 20% to deduct the amount of income in 6% of dealing price, in the circumstance of deduction of dealing price to the seller at an auction.

Secondly, if the seller is a Taiwanese, the art and culture industry shall obtain the documents about the agreement for separate taxation from the seller. In the circumstance of failure to obtain such documents, the practitioner is exempted to apply for withholding while paying the dealing price to the seller and the income of seller is not allowed to be applicable to separate taxation. The costs and expenses shall be deducted from the dealing price before listed as “Property Transaction Income”, combined into consolidated gross income and declared jointly.

Thirdly, in the circumstance that the Taiwanese is entrusted by a company to create original artworks, the original costs ,necessary expenses, and income from provision of labor forces shall be counted as “Income from Professional Practice”. Such income shall be combined into the total amount of individual income to declare and is not allowed to be applicable to separate taxation.

For example, person A is a Taiwanese and sells his own original created artworks at an auction held by an arts and cultures industry. If this auction is approved by Ministry of Culture to apply to separate taxation, which is also agreed to be applied by person A, the separate taxation rate in 1.2% from the sales income could be enjoyed for him.

In conclusion:

1. The company which intends to apply to the separate taxation shall submit an application to Ministry of Culture by one month of holding of the event or activity;
2. The company shall obtain the agreement of separate taxation by the seller, or the tax payables can not be withheld on behalf of seller otherwise;
3. If the created artworks is entrusted by a company, the income shall be counted as “Income from Professional Practice” and combined into the total amount of individual income to declare and is not allowed to be applicable to separate taxation.