Introduction to Taiwan Taxation
Individual Income Tax
There are different ways to declare Individual Income Tax, which are applicable to the alien taxpayers based on the duration of their stay.
1. Non-Residents of Taiwan
Any person staying in Taiwan for less than 183 days within a tax year (Jan.1 to Dec.31) are considered as ‘Non-Residents?of the Republic of China. The non-residents will be deducted a 20 percent withholding tax from the interest earned at the time of interest payment.
2. Residents of Taiwan
One who stays in Taiwan for more than 183 days within a tax year is considered as ‘Resident?of Taiwan. The resident will be deducted the individual income tax according to the withholding rate.
| Net Taxable Income (NT$) |
Tax Payable ( A=Taxable Income Amount )
|
|
0 - 410,000
|
6% (Rate)
|
|
410,001-1,090,000
|
A X 13% (Rate)-28,700 (Progressive Difference)
|
|
1,090,001-2,180,000
|
A X 21%(Rate)-115,900(Progressive Difference)
|
|
2,180,001-4,090,000
|
A X 30%(Rate)-312,100(Progressive Difference)
|
|
More than 4,090,001
|
A X 40%(Rate)-721,100(Progressive Difference)
|
For example, a taxpayer has been staying in Taiwan more than 183 days, his monthly salary is NT$70,000 and yearly income amount is NT$840,000, so
the Net Taxable Income is NT$840,000 ?NT$46,000(Standard Deduction) ?NT$78,000 (Wage/Salary Deduction Amount) ?NT$77,000 (Personal Exemption)= NT$639,000
Tax Payable is NT$639,000 (Net Taxable Income) x 13% (Rate) ?NT$28,700 (Progressive Difference)= NT$54,370
Enterprise Income Tax
Enterprise Income Tax is charged on the income of the business entity at the rates depending on the location of its head office as follows:
The head office within the ROC territory
In the case that the head office of the business entity is registered within the territory of Taiwan, it is viewed as ‘resident enterprise?for tax purpose, and as such the Enterprise Income Tax should be charged on its worldwide earnings. However, in the event that Enterprise Income Tax or a tax of similar nature has already been paid on the income, the tax paid may be used as a foreign tax credit to offset the ROC income tax liability.
The head office outside the ROC territory
If the head office of the business entity is registered outside the ROC territory (such as branch office), it is regarded as ‘non-resident enterprise?for tax purpose, so the income tax of the non-resident enterprise is subject to the income derived from ROC territory only.
|
Taxable Income (NT$)
|
Rate
|
|
Below $50,000
|
0
|
|
50,000-100,000
|
15%
|
|
More than 100,000
|
25%
|
Value-Added Tax (VAT or Goods and Services Tax, GST)
VAT is levied on the added value that derived from each sale of the service or goods made in the course of business. Currently, the tax rate is between 5%-10%. VAT zero rating is allowable when the goods or service is related to exports. As the overpaid VAT is on goods or services applied to 0% VAT, the business entity may apply for the tax refund for the amount of overpaid business tax.
VAT shall be declared every two month, whereas it may be filed on a monthly basis for the goods or service applied to zero rating. The declaration date is due by the 15th day of the next period.
Custom Duty
- Tax Applies to:
In accordance with Customs Import Tariff, the import duty is livable on goods imported from abroad on an ad valorem basis or on a specific basis.
- Tax Payer:
The consignee of the imported goods, or the bearer of the bill of lading, or the holder of the imported goods, as the case may be.
- Tariff Rate:
There are three sets of tariff rate. First set of rate is for imported goods of WTO members or other countries or regions with reciprocal treatment with R.O.C. The Second set of rate is for imported goods of low- or developing countries and regions, or goods of countries with free trade agreements with R.O.C. The third set pf rate is for imported goods for all other countries that are not included in the first two sets.
- Average real duty rate in 2002: 2.02%
Average nominal duty rate: 6.99% |
