Tax Planning
HK & Taiwan: Tax Policy Updates and What They Mean for Your Tax Planning
Recent revisions in Hong Kong and Taiwan tax regimes affect allowances, ADTA treaties, and deductions – important for individuals, parents, and cross-border entities.
By NomadicTax Research Team • 5-8 min read • September 6, 2026
## Overview of Recent Tax Policy Moves in Hong Kong & Taiwan
Both regions have introduced tax changes aimed at easing burdens on families, improving international treaties, and aligning with global tax norms.
Here are **key changes**:
- **Hong Kong**'s 2026-27 Budget includes increased allowances, a one-off tax reduction for 2025/26, and revised stamp duty rules. ([ird.gov.hk](https://www.ird.gov.hk/eng/tax/budget.htm?utm_source=openai))
- **Taiwan** has amended the Individual Income Tax law to provide higher exemptions and deductions for families with children and adjusted insurance-premium deduction limits. ([mof.gov.tw](https://www.mof.gov.tw/%20/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=8b12f394a64e40959fd1f8e805ecf853&utm_source=openai))
- Taiwan’s Ministry of Finance has expanded its network of Avoidance of Double Taxation Agreements (ADTA), including a renewed treaty with Singapore and a new one with Tuvalu, effective from January 1, 2027. ([mof.gov.tw](https://www.mof.gov.tw/eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=f6857bbb6d684443851733297401bcf0&utm_source=openai))
## Tax Planning Implications for Individuals & Families
| Scenario | What Changes Mean for You | Actionable Steps |
|---|---|---|
| You’re a parent or about to become one | In **Hong Kong**, child allowance and additional child allowance increase from HK$130,000 to HK$140,000 per child; claim extra child allowance for newborns extended to two years from 2026/27. ([ird.gov.hk](https://www.ird.gov.hk/eng/tax/budget.htm?utm_source=openai))
In **Taiwan**, exemption for each under-age child increased from NT$101,000 to NT$151,500; preschool deductions combined with this for children under six. ([mof.gov.tw](https://www.mof.gov.tw/%20/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=8b12f394a64e40959fd1f8e805ecf853&utm_source=openai)) | If you have young children, time births and claims to maximize deductions (e.g. ensure date of birth and residency allow these benefit windows); update tax return templates once the forms change. |
| You're a cross-border entity or resident | Singapore-Taiwan ADTA renewal reduces withholding tax on dividends/royalties to **10%**, revises Permanent Establishment (PE) thresholds, and phases in tax credit incentives over three taxable years. ([mof.gov.tw](https://www.mof.gov.tw/eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=ea91d6b8965c4bd5893ff57298b17bf5&utm_source=openai)) | Review withholding tax available under new treaty, consider whether Singapore operations can be structured to benefit; plan PE-exposure. |
## How Global / Cross-Border Issues Come In
- **BEPS & Information Exchange**: Hong Kong is rolling out the Inland Revenue (Amendment) Bill 2026, covering crypto-asset reporting and a modified Common Reporting Standard, effective Jan 1, 2027, to comply with international transparency standards. ([ird.gov.hk](https://www.ird.gov.hk/eng/tax/dta_aeoi.htm?utm_source=openai))
- **Shipping & Commodity Tax Concessions**: Proposal in Hong Kong to give shipping-related companies and physical commodity traders an optional 15% concessionary rate to ease the BEPS compliance burden. ([ird.gov.hk](https://www.ird.gov.hk/eng/ppr/archives/26061002.htm?utm_source=openai))
## Examples & Calculations
**Example 1: Hong Kong family with two children**
- Under the new rules for 2026/27, each child’s allowance is HK$140,000 + extra child allowance also HK$140,000 = HK$280,000 for newborns in their first two years. Basic allowance and married person's allowance also increased. — this can reduce taxable income significantly. ([ird.gov.hk](https://www.ird.gov.hk/eng/faq/budget2026_27.htm?utm_source=openai))
**Example 2: Taiwan taxpayer with under-six children**
- Before: child exemption NT$101,000 per under-age child. Now: NT$151,500. Add preschool special deductions for under-6 kids. For two young children, combined deduction before Taiwan’s 115th year filing could be substantial. ([mof.gov.tw](https://www.mof.gov.tw/%20/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=8b12f394a64e40959fd1f8e805ecf853&utm_source=openai))
## Actionable Takeaways
1. **Update tax modelling tools** to incorporate new thresholds, allowances and time windows.
2. **Assess residency & PE status** if operating cross-border (e.g. Singapore or Singapore-Taiwan treaty). Cross-border income, dividends, royalties may benefit under new ADTAs.
3. **Plan payment schedules carefully**: Hong Kong’s one-off 2025/26 tax reduction *does not apply to provisional tax*; you must still pay that, and overpayments may be refunded later. ([ird.gov.hk](https://www.ird.gov.hk/eng/faq/budget2026_27.htm?utm_source=openai))
4. **Watch for form changes**: Taiwan will adjust tax forms for filings in May 2027; update insurance premium and child deductions accordingly. |
## Long-Term Outlook & Compliance Risks
- With heightened global tax cooperation, both jurisdictions are moving toward greater transparency and **limiting tax avoidance**, especially around CFCs and transfer pricing.
- Entities should prepare for increased reporting burdens (e.g. Hong Kong’s crypto-asset and CRS changes).
- Families should keep careful records for dependent age, residency, insurance premiums to substantiate claims in case of audit.
✅ Bottom line: Enjoy the benefits of the new changes — but keep up with filing timing, documentation, and treaty details.