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Regulation about alternative minimum tax (individual) in Taiwan |
| Purpose |
| The purpose of the Alternative Minimum Tax (AMT) is for taxpayers with high income but enjoy various types of tax deduction, taxpayers that completely free of tax or have a low tax burden also have basic contribution to the finance of country. Therefore, most of the taxpayers who have paid taxes and are not entitled to enjoy the tax deduction, is not applicable to the Alternative Minimum Tax (AMT). |
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| Formula |
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A= [Basic income of individual (Note1) ?Exemption (6.7 million/household)] * 20%
B= [The net consolidated income * 5%~40%]
When A>B, amount of (A-B) should be paid.
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| Note 1 |
| Basic income of individual = 1 + 2 + 3 + 4 + 5 + 6 |
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| 1. |
The net consolidated incom |
| 2. |
Individual overseas income (China exclude from overseas, while Hong Kong and Singapore included) (1 million/household) (Note2) |
| 3. |
Gains derived from private fund |
| 4. |
Life insurance and annuity insurance that paid by insurance (33.3 million/household) |
| 5. |
When declare the individual income tax, could deduct the non-cash donation (such as donation of land, columbarium pagoda, shares etc.) |
| 6. |
The Ministry of Finance announced that the amount of income or deductions that can be deducted when declare the individual income tax. |
| Note 2 |
| The items or categories of individual overseas income same as the sources from Republic of China. They are divided into 10 categories, including overseas income, that’s income from profit-seeking, income from professional practice, employment income, interest income, income from lease and income from royalties, income from self-undertaking in farming, fishing, animal husbandry, forestry and mining, income from property transactions, income from contests and games and from prizes and awards won by chance, income from separation, other incomes etc. |
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| Case 1 |
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Mary has passport, household registration and identity card of Republic of China, she participates in National Health Insurance and National Pension. But she long-term stay in Hong Kong and does not stay more than 183 days in Taiwan for one year.
Mary is employed by a company in Hong Kong, her annual income and bonus is about NT$ 1 million, and her investment income from Hong Kong stocks market is about NT$ 3 million. Mary only has some interest income from the bank in Taiwan.
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| Q: |
Does Mary need to file tax return in Taiwan on May? |
| A: |
Mary is a citizen of Republic of China, and the core of living of her life in Taiwan (with Taiwan Health Insurance and National Pension), she is a tax resident in Taiwan, so she needs to file for tax return on May.
The Hong Kong salary income is about NT$ 1 million and the investment income from Hong Kong stock market is about NT$ 3 million. The total amount is about NT$ 4 million, belongs to the overseas income. There is already exceeded NT$ 1 million, should include in the minimum tax calculation, however, there is exemption of NT$ 6.7 million. There is no need to declare and pay for alternative minimum tax after calculation. |
| Case 2 |
| Mary’s friend, Linda is also the Taiwanese working outside Taiwan, but Linda’s stationary point is in Singapore and employed by Singapore company. Annual income of Linda also over NT$ 1 million, but she heard that Taiwan and Singapore have tax treaty, will have tax exemption. |
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| Q: |
Does Linda needs to file tax return in Taiwan on May? |
| A: |
Linda is a citizen of Republic of China, and her life is main in Taiwan (has Taiwan Health Insurance and National Pension), still a tax resident, so she needs to file for tax return on May. (The taxation agreement judgment principle is the country of residence of the tax resident is the taxable country, so Taiwan has the right to tax Linda)
The Singapore income is about NT$ 1 million belongs to the overseas income. There is already exceeded NT$ 1 million, should include in the minimum tax calculation, but there is exemption for NT$ 6.7 million, so there is no need to declare and pay for alternative minimum tax. |
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| Case 3 |
| Miss Wu has dual nationality, she has household registration in Taiwan and participated in Taiwan Health Insurance. Her friend told her, if she held the American passport to enter and leave Taiwan, and did not use Taiwan passport, would not leave the resident record, then she does not need to declare for alternative minimum tax. |
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| Q: |
Is that the proper information? |
| A: |
Miss Wu has household registration within territory of Taiwan, and her life counted main in Taiwan (with Taiwan National Insurance), she is a tax resident. If her overseas income merged with local income is more than NT$ 6.7 million, she should declare the tax according to the regulation and it is irrelevant with what kind of passport she used to enter or leave Taiwan. | |
