The Go Master was nominated in four categories, including Best Actor for Chang Chen.
The Golden Horse Executive Committee in Taipei is awaiting an official letter from Fortissimo Film Sales before the film can be officially withdrawn.
Tian's producer confirmed that the film would not participate in the competition in Beijing. "It is the regulations of Chinese government and we are following it," says Hao Li, director of Tian Zhuangzhuang office.
Before the Golden Horse nominations were announced on 23 October, several other Chinese films had fallen at the starting gate.
Pang Ho-cheung's Isabella was withdrawn by Hong Kong's Media Asia at the request of its Chinese co-producer. Mainland films including Zhang Guoli's The 601 Phonecall and Yang Yazhou's Loach Is Fish Too failed to send a 35mm print.
China's Regulation on Film Management requires filmmakers to apply for permission before participating in overseas film festivals and awards.
It is understood that a film produced in China will not be allowed to participate at the Golden Horse Film Awards, based on an internal Film Bureau rule. However, films co-produced by Hong Kong or overseas film companies are no longer bound by such a rule.
Beside the regulatory reason, the Chinese Film Bureau is believed to be concerned about a new category exclusively for Taiwan films named the Formosan Award.
The word "Formosa", the Portuguese name for the island, is perceived as a politicised pro-independence gesture. China maintains that Taiwan is a rogue province.
In 2002, organisers refused to allow President Chen Shui-bian make a speech at the awards ceremony, insisting it was not a political event.
Legislators attempted to slash the awards's $450,000 budget the following year in retaliation, claiming the event was trying to appease Beijing.
Earlier this month, Taiwan-based Tsai Ming-liang withdrew his film I Don't Want to Sleep Alone from the Film Awards, upset that his film was nominated in only two categories. Tsai also withdrew his film as one of the opening films of the affiliated Golden Horse Film Festival.
Beijing-based Century Hero Film Investment, a subsidiary company of China CITIC Group is the main investor of The Go Master while Fortissimo Films handles its international sales.
The Golden Horse Film Awards are due to take place on 25 November in Taipei.