Tax 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.
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.
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.
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.
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!
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.
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:
- Income subject to IBT = Regular taxable income + add-back items
- IBT = (Income subject to IBT – TWD6.7 million) x 20%
Foreign-sourced income is included in the calculation of IBT if:
- The individual is a tax resident of Taiwan.
- Foreign-sourced income is equal or exceeds TWD1 million and basic income exceeds TWD6.7 million.
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).
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.