Umbrella Company in Taiwan
Independent contracting in Taiwan isn’t always straightforward. You’ve got immigration issues, tax difficulties, and mountains of complex admin work. Even worse, missteps can cost you serious money, or even land you in legal trouble.
Before you consider taking a contract in Taiwan, you should be aware of what you’re getting into – and how you can make it simpler.
Difficulties of Contracting in Taiwan
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Taiwan.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Taiwan, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Taiwan and your home country can seem like full-time work in itself.
How Umbrella Companies Work
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Taiwan. Even better, most are experts in Taiwanese and expat tax law, meaning they’ll also help you optimise your earnings in Taiwan.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Why Use an Umbrella Company in Taiwan
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Taiwan (which means avoiding fees, fines, or even worse penalties).
How We Can Help You
There’s a huge variety of Umbrella Companies with different specialities and advantages in Taiwan. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Taiwan and match contractors with the right company for them. If you’ve already secured a contract in Taiwan, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).
A Contractor’s Guide to Taxes in Taiwan
One of the most consistently challenging aspects of contracting in Taiwan is complying with the country’s tax system. As well as paying tax in Taiwan, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Taiwan
If you’re working in Taiwan under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Taiwan for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Taiwan, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Taiwan through PAYE is left with the prospect doing everything themselves.
Do you know much about Taiwanese Tax Law? Does Taiwan have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Taiwan can range from 5 to 45 percent, and you need to be sure you are placed in the correct tax brackets.
Tax Filing in Taiwan
|When Do You Need to Lodge Your Tax Return?||1 May – 31 May|
|Tax Filing Deadline||31 May|
|Can you file it online?||Yes|
How to File Taxes in Taiwan
Step 1: Collect Documents and Information
There are 2 ways to ensuring you have the information needed to file taxes:
- Have a Financial CA number, ARC (Alien Resident Certificate) number or Passport/Residence/Permit Number (as specified on your ARC or Entry and Exit Permit as of January 31, 3017). You can obtain a Financial CA number from your bank. To do so, fill out a Financial CA request slip* and show it to your bank. With a Financial CA, everything will be auto-filed for you when you e-file.
- Know your income from your employers and their tax ID number. At any National Taxation Bureau, you can obtain a CD-Rom with all the data.
Step 2: Install e-Filing Program
Install an e-Filing program on your computer, which can be obtained from the National Taxation Bureau website here(link is external).
Step 3: Complete e-Filing via Program
You will be required to fill out your basic information, date of entry and exit, income data, deductions, and pay your taxes by credit card.
Step 4: Submit Paper Documents
Submit or mail your paper documents before June 12. Paper documents include any proof used to substantiate itemised deductions, overseas income, supporting dependents, receipts for cash payments etc. If the address shown on your ARC falls within Taipei City, send your paper documents to the National Taxation Bureau of Taipei at No. 2, Sec. 1, Zhonghua Road, Wanhua District, Taipei City 10802, ROC.
See detailed instructions on filing on the National Taxation Bureau website(link is external).
Tax Figures in Taiwan
|Currency||New Taiwan Dollar (TWD)|
|Tax-free Threshold in Taiwan||TWD520,000|
|Income Tax Rates||
|Notes||The rates above apply to resident aliens.
A non-resident alien residing in Taiwan for less than 90 days in a calendar year is subject to a withholding tax of 18% on Taiwan-sourced salary income. A non-resident alien residing in Taiwan for more than 90 days but less than 183 days in a calendar year is subject to tax at a flat rate of 18% on Taiwan-sourced and foreign-sourced salary income.
Income Basic Tax
Taxpayers need to pay either income tax or IBT, whichever is greater. IBT is calculated via the following formula:
Foreign-sourced income is included in the calculation of IBT if:
Tax Residency in Taiwan
When do you become a tax resident in Taiwan
You become a tax resident in Taiwan when:
- You stay in Taiwan for 183 days or more in a calendar year; or
- You have a household registration in Taiwan, stay in Taiwan for more than 31 days, and Taiwan is your centre of vital interest (i.e. you are entitled to Taiwan social security benefits, your spouse or dependent child resides in Taiwan, or performs other economic activities in Taiwan).
Does the 183 day rule apply in Taiwan
Am I taxed on my global income in Taiwan
Residents: Residents are taxed on their global income.
Non-residents: Non-residents are taxed on their global income if they reside in Taiwan for more than 90 days in a calendar year.
Can you set up your own Limited Company in Taiwan
|How long does it take to set up||10 days|
|How much does it cost||TWD25,600 – TWD27,300|
|Is it easy?||Starting a Business Rank: 16/190 (Source: World Bank)|
Tax Calculator in Taiwan
If you are a contractor and want a calculation on your tax and net retention in Taiwan, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Taiwan
Contractors in Taiwan are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Taiwanese umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Taiwanese taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Taiwanese tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Taiwan
We work with numerous umbrella companies in Taiwan, many of whom are experts in tax and immigration laws. If you have any questions about tax in Taiwan, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Taiwanese work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Taiwan but without the overhead of directly dealing with the Taiwanese tax authorities. Get in touch with us today for some reliable advice on tax in Taiwan!
A Contractor’s Guide to Work Permits in Taiwan
Immigration is one of the primary concerns for any contractor hoping to start working in Taiwan. Permanent employees will find it easy to get their Taiwanese work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Taiwanese work permit, known more commonly as the Alien Resident Certificate (ARC), is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Taiwan is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
How Can Umbrella Companies Help You Get a Work Permit in Taiwan ?
As your permanent employer, umbrella companies are able to sponsor you for your Taiwanese work permit provided they’re on the register of approved sponsors. Many different companies offer this service, because it makes contracting in Taiwan infinitely simpler and saves you the hassle of continuous paperwork. Instead of changing your work permit every time you get a new contract, you can just work how you ordinarily would under the same permit. They protect you from the bureaucratic “rain” of legal compliance with the Taiwanese immigration authorities. They can even deal with the Taiwanese Embassy directly.
Through their service you may be able to use a business visa to get started quickly and then transition to a work visa in Taiwan. It depends on your specific visa requirements. Be aware you may have to register for a residence permit in Taiwan.
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I utilized PEO services with Contractor Taxation & have found the services invaluable. We had to quickly establish a presence in China to meet a perceived large market, knowing how difficult it could be setting up a complete operation there. CT helped us immensely to navigate these waters and establish this beachhead without a lot of the normal distractions associated w/opening a full operation. This allowed us to focus on our client’s expectations and keep us moving forward in the market.