Probably the victorious Allied Powers would apply the laws of the SCAP (Supreme Commander for the Allied Powers) to the territory of Formosa, however, the PoD or the Point of Divergence which involves the different Cairo Conference and Postdam Conference, as well as decision of the American General MacArthur to launch a military operation in 'liberating' the island and discreetly retain the island under the possession of the Japanese, even when the postwar country is under Allied occupation.
The big problems that stemmed from Chiang Kai-shek, the Generalissimo who took part in the Cairo Conference firmly advocated for an eventual return of the island, known as Taiwan or Formosa (incl. Penghu Island) back to China, since it was ceded during the First Sino-Japanese War in between 1894 to 1895 which has Qing Dynasty, the previous regime that has claims on the island along with the succeeding state like the Republic of China.
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If Taiwan or Formosa is retained under the possession of Japan, it will require China to split up between the Communist North or reduced to Manchuria and a democratic or pro-US autocratic South, it would even lead to some consequences where people on that island are more likely to vote anti-Communist parties in the elections. Also, don't forget that Taiwan/Formosa could be a major powerhouse for the manufacturing industry, especially the semiconductor and information industry, as in terms of the economic effects if Japan retains the sovereignty or territory of the island that Formosa will be a major contributor to the economy, in part due to the said industrial sector that made up for contributions to the economy of the country.