We provide a simple overview of the regulations determining tax residency in Taiwan, as well as a list of rates for different types of income and the role tax planning services can have in reducing your overall income tax bill.

Overview

Taiwan tax residence is based on length of stay in Taiwan, which is calculated based on dates stamped in one’s passport or the Certificate of Entry and Exit Dates issued by the National Immigration Agency. For those entering and exiting Taiwan multiple times within a taxable year, the period of residence is the total number of accumulated days in a taxable year. A taxable year is January 1^st to December 31^st.

Residents

Taiwan tax residents are people who have spent 183 days or more in Taiwan during a taxable year. See figure 1 for the applicable rates.

Non-residents

There are two categories of non-resident. Those staying in Taiwan for between 91-182 days in a tax year, and those staying 90 days or less. See figure 2 for the applicable rates.

For those staying 91-182 days, income tax shall be declared and computed according to the withholding rate on income derived from sources in Taiwan. If remuneration is received from abroad for services performed while in Taiwan, they should be filed for and taxed at 18%.

For those staying 90 days or less, income derived from sources in Taiwan is withheld according to the withholding rate and paid at source. The taxpayer doesn’t need to file a tax return unless otherwise specified (see figure 2).

Filing period

The filing period is May 1^st-31^st in the current tax year. If leaving Taiwan, taxpayers must file their income tax returns before departure.

Income source

Income source is classified based on where activities or work takes place.

Taiwan source

Income derived from activities or work carried out in Taiwan, or remuneration sent from outside of Taiwan but related to work carried out in Taiwan is classed as Taiwan source income and is subject to tax.

Non-Taiwan source

Income derived from sources outside Taiwan is classed as non-Taiwan source. This is governed by the Alternative Minimum Tax (AMT), or Income Basic Tax, effective since 1 January 2010. Only those who are Taiwan residents and earn over NTD6.7m in basic income and NTD1m in overseas income have to pay this tax. We will cover this subject in greater detail in a different article.

Exemptions, deductions and DTAs

The tax code in Taiwan allows filers to claim a number of deductions and exemptions, however these are only available for Taiwan residents. For example there is an NTD92,000 exemption for each taxpayer, spouse and dependent.

In terms of deductions, filers have two options: Standard or itemized.

Standard allows filers to claim an NTD124,000 deduction for one person (NTD248,000 for a married couple joint filing).

Itemized deductions can be claimed for donations, losses from disaster, medical and maternity expenses, etc., but original receipts must be attached.

In addition Taiwan has DTAs (double taxation agreements) with several countries that lower tax rates for certain types of income.

Further advice

There are many exemptions and exceptions that foreign individual located in Taiwan can benefit from, and Chungsun Prime CPAs with our years of experience in tax planning can help you optimize your tax bill.

In addition, many foreign professionals working in Taiwan also receive income from territories outside Taiwan. People who fit this bill could very well reduce their tax bill if Taiwan has a DTA with a foreign country. For example the Taiwan-UK DTA allows a 10% tax rate on dividends, versus a 21% tax on dividends for a country with no DTA with Taiwan. Please contact us if you require assistance with tax planning, or have questions about this article’s content.

Chungsun Prime CPAs, Taipei

Vincent Fan CPA

Matt Baum

 

Tax rate overview

Figure 1

Progressive tax rates for Taiwan residents, for tax year 2022

Net taxable income		Tax rate (%)		Progressive difference
0-560,000	×	5	－	0	=	Tax Payable
560,001-1,260,000	×	12	－	39,200	=	Tax Payable
1,260,001-2,520,000	×	20	－	140,000	=	Tax Payable
2,520,001-4,720,000	×	30	－	392,000	=	Tax Payable
4,720,001 and above	×	40	－	864,000	=	Tax Payable

Source: National Taxation Bureau of Taipei, Ministry of Finance.