Taiwan is one of Asia’s most mature and fast-growing digital markets. With exceptionally high social media penetration and strong eCommerce adoption, influencer marketing has become a crucial channel for brands entering Taiwan. Foreign companies that establish subsidiaries or branches in Taiwan frequently rely on local KOLs and influencers to accelerate brand exposure, improve consumer trust, and drive marketplace sales.
However, once a Taiwan entity pays domestic influencers, tax and compliance responsibilities apply immediately. This includes withholding tax, invoice requirements, cost deductibility rules, documentation standards, and payment reporting obligations. Many foreign-owned subsidiaries underestimate these requirements, which can lead to additional tax assessments, penalties, and difficulty deducting marketing expenses.
This expanded guide provides a comprehensive overview of what foreign businesses need to know before working with Taiwan influencers.
Why Influencer Marketing Matters for Foreign Brands in Taiwan
1. Taiwan consumers rely heavily on influencer content
Before buying, local consumers frequently check:
- YouTube reviews
- IG / TikTok videos
- Blogger articles
- Unboxing & Comparison Content
Influencer recommendations often outperform traditional ads in trust and conversion.
2. eCommerce platforms integrate creator marketing
Platforms like Shopee, MOMO, PChome, and Pinkoi encourage:
- Influencer affiliate links
- Short-form product videos
- Review-based promotions
- Creator-led product launches
Without creator content, click-through rates (CTR) and conversions drop significantly.
3. Efficiently testing market fit and local consumer preferences
Foreign companies entering Taiwan often use influencer campaigns to identify:
- Local pricing sweet spots
- Product messaging and cultural references that resonate
- Whether the product category aligns with Taiwan consumer behavior
- Which product variations (color, size, bundle) perform best
Such insights can guide localization strategy, retail expansion, and platform selection.
Tax Rules When a Taiwan Entity Pays KOLs / Influencers
The tax treatment depends on whether the influencer is an individual or a business entity.
1. When the KOL is an individual (no business registration)
- Payments made by your Taiwan company are categorized as professional service income. Your entity must:
- Withhold 10% income tax for Taiwan resident influencers
- File monthly withholding returns (if required)
- Provide withholding statements by January of the following year
- Keep service agreements and proof of deliverables
Influencers who are not registered businesses cannot issue official invoices, making withholding mandatory.
2. When the KOL operates a registered business entity & issues invoices
If the influencer operates:
- Limited companies
- Sole proprietorships
- Business entities issuing official uniform invoices (GUI invoices)
Then:
- No withholding tax applies
- Your Taiwan entity must collect valid invoices for expense deductions
- The influencer independently reports the business revenue
This structure is increasingly common among professional creators due to tax efficiency and easier brand collaboration.
Accounting Requirements for Deducting Influencer Expenses
Taiwan’s tax authorities closely review marketing and promotional expenses, especially for foreign subsidiaries. To secure expense deductibility, your Taiwan company must maintain the following records in a consistent and traceable manner, ensuring that each item clearly supports the commercial purpose of the KOL collaboration:
|
Document |
Purpose |
|
Written service agreement |
Defines deliverables, ownership, and fee structure |
|
Proof of deliverables |
Screenshots, URLs, videos, drafts |
|
Official invoice or withholding document |
Essential for tax deduction |
|
Proof of payment |
Bank transfer or payment system records |
Without these documents, tax authorities may challenge whether the marketing services were genuine or reasonable. In many audits, authorities also request internal approval forms, marketing proposals, or campaign summaries to confirm that the expenditure aligns with business objectives. Strengthening documentation not only protects deductibility but also reduces the risk of additional tax assessments or penalties.
What Happens if a Taiwan Entity Does Not Comply?
1. Expenses may be denied
Taiwan auditors often request influencer-related documentation. Missing invoices or withholding forms may cause:
- Tax authorities may treat the payment as a non-deductible expense
- Corporate income tax increases (20% + interest)
2. Failure to withhold → penalties
If required withholding is not performed:
- Authorities may require your Taiwan company to pay the unwithheld tax
- Penalties may reach up to five times the withholding amount
- Repeat non-compliance can trigger more frequent audits
For foreign groups, these penalties can accumulate quickly across multiple campaigns.
3. Transfer pricing concerns
Unclear contracts or deliverables may trigger questions such as:
- Is the marketing expense reasonable?
- Is value shifting between related foreign entities?
This is a frequent audit point for foreign groups.
Additional Practical Considerations for Foreign Companies
1. Currency and payment structure
Many influencers prefer receiving:
- TWD payments
- Lump-sum fees
- Post-campaign bonuses tied to performance
Foreign companies should ensure contracts clearly specify currency and tax treatment.
2. Product seeding (free goods)
Even free products can be taxable:
- The value of gifted items may be considered income
- Documentation of product value and purpose is required
- Companies should still record the cost for internal control and tax review
3. Content licensing and usage rights
If the company reuses influencer content for:
- Paid ads
- Website banners
- Marketplace listings
A separate licensing fee may apply, increasing taxable income for the influencer.
Best Practices for Foreign Companies Working With Taiwan KOLs
- Verify the influencer’s entity type before contracting
- Include clear deliverable descriptions and usage rights in agreements
- Collect invoices or issue withholding statements promptly
- Maintain a full archive of posts, videos, screenshots, and analytics
- Plan budgets that include withholding tax implications
- Review influencer fees for reasonableness and align with transfer pricing documentation
These practices help ensure tax compliance and smooth audits.
Conclusion
Taiwan’s influencer ecosystem offers strong conversion potential for foreign companies, especially those entering Taiwan’s eCommerce market. However, influencer payments involve complex tax requirements—particularly around withholding, invoicing, and documentation. By implementing proper compliance procedures, foreign-owned Taiwan entities can fully leverage influencer marketing while minimizing tax risks and ensuring expense deductibility.