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What is the Rights and Obligations When Act as Person in Charge of a Taiwan company? |
Answer: No matter foreigners or Taiwanese, as a person in charge of a Taiwan company, there are the same regulation under Company Act. For the insurance and pension part to be mentioned as below, the employer has their own special provision. For the taxation part to be mentioned as below, there are different provision of taxation for the tax resident and non-tax resident in Taiwan. Table below shows the details for tax resident and non-tax resident in Taiwan.
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Tax resident in Taiwan (Note 1) |
Non-tax resident in Taiwan |
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Company Act |
Company Act Article No.23
(The person in charge shall be liable for the violation and damages)
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The person in charge of a company shall have the loyalty and shall exercise the due care of a good administrator in conducting the business operation of the company.
Responsibility for the person in charge of company: If the person in charge has acted contrary to the provision, shall be liable for the damages to be sustained by the company.
Violated any provision of the applicable laws and/or regulations and thus caused damage to any other person, the person in charge shall be liable, jointly and severally, for the damage to such other person.
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Company Act Article No.380 & No.382
(The person in charge violated the provision for responsibility of liquidation)
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1. The person in charge of a company act as liquidator of company.
2. Shall complete liquidation of its business and right and obligation incurred in Taiwan.
3. The property of a foreign company in Taiwan shall not be moved out from Taiwan during the time of liquidation and shall not be disposed.
Responsibility for the person in charge of company: For foreign company in respect of the transactions done in Taiwan or obligation contracted by its branch office, shall be jointly liable with foreign company.
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Insurance and Pension
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Labor Insurance
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Employer could entitle the labor insurance.
(Insurance salary is TWD 45,800: Company responsible to pay national health insurance fee TWD 3,046 per month )
＊ Foreigners are required to hold working permit to participate in labor insurance.
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National Health Insurance
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Employer is responsible to pay 100% of the health insurance.
For company employee below 5 persons: Insurance salary is TWD 34,800: Employee is responsible to pay national health insurance for TWD 1,632 per month.
For company employee above 5 persons: Insurance salary is TWD 45,800: Employee is responsible to pay national health insurance for TWD 2,148 per month.
＊ Foreigners with Alien Resident Certificate (ARC) should participate in health insurance. (Note 2)
＊ For representative person of Taiwan representative office, did not define as employer, should insure by using the identity of employee (Company will responsible to pay a portion of insurance premium)
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Pension
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Employer could not entitle 6% of the pension
＊ Limited to the participation for resident of Taiwan (with Taiwan national identification card)
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Tax resident in Taiwan (Note 1) |
Non-tax resident in Taiwan |
| Taxation |
Taiwan company pay tax for foreigner
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The employment contract or other sufficient supporting document should mention the tax to pay for foreigner is a part of remuneration, and withholding tax based on the salary income, file the withholding various income and withholding exemption certificates. The tax paid by profit seeking enterprise to foreigner could counted as the part of salary expenses. Otherwise will regard as the gift to foreigner, and listed in the other income (category 10) from the individual income tax. |
Not applicable
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Income from salaries and wages |
Tax rate: 5%, 12%, 20%, 30%, 40% |
Tax rate: 18% |
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Obtained distributed earnings from the Taiwan company
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Two methods to retain earnings.
Method 1: Deduction of tax= Dividend*8.5%, up to TWD 80,000
Method 2: Separate taxation, levy on the basis of 28%
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Tax rate: 21% |
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Overseas income (income from country other than Mainland China) |
Overseas income reached TWD 1 million per household, applicable for Alternative Minimum Tax (AMT)
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Not applicable for Alternative Minimum Tax (AMT)
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Income from the stock transactions that invest from the Taiwan stocks markets, and the company has issuing shares |
Income from the securities transactions ceased to be imposed
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Income from the securities transactions ceased to be imposed
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Income from the stock transactions that invest from the Taiwan stocks markets, and the company is not issuing shares |
Merged into income from the transaction of property for tax declaration
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Tax rate: 20%
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Disposition the transactions income of Taiwan real estate (house and land)
*The real estate acquired after January 1,2016
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Tax rate:
Holding period within 1 year: 45%
Holding period between 1 to 2 years: 35%
Holding period between 2 to 10 years: 20%
Holding period above 10 years: 15%
(By using separate taxation) |
Tax rate:
Holding period between 1 year: 45%
Holding period more than 1 year: 35%
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Rent for Housing, Insurance premium, Medical and childbirth expenses, Special deduction of income from salaries, Special deduction for savings and investment etc. |
Could entitle from tax exemption or itemized deductions or special deductions
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Could not entitle from tax exemption or itemized deductions or special deductions | |
| Note 1. |
| Situations to be mentioned below is about tax resident in Taiwan. |
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With household registration + focus of life is in Taiwan (With labor insurance, Taiwan national health insurance, pension or spouses and minor children is in Taiwan) + stayed in Taiwan for more than 1 days.
Example: Resident in Taiwan, Taiwanese working overseas |
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With household registration + focus of life is not in Taiwan (Without labor insurance, Taiwan national health insurance, pension or spouses and minor children is not in Taiwan) + stayed in Taiwan for more than 31 days.
Example: Overseas Chinese residing in American (Means, resides within the Taiwan for a period less than 31 days, is a non-tax resident in Taiwan) |
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Without household registration + stayed in Taiwan for more than 183 days.
Example: Foreigners (With tax payment duty in Taiwan, foreigners should file their tax return and payment should be made during the May in next year) |
Additional：Non-tax resident in Taiwan would also with tax payment duty in Taiwan: Without household registration + stayed in Taiwan for more than 90 days but less than 183 days
Example: Foreigners (With tax payment duty in Taiwan, Taiwan company will withholding tax from the foreigners salary every month, to assist foreigners clear the tax to be paid)
| Note 2. |
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1.Any person who has an alien resident certificate in the Taiwan area, besides employed by particular employers, employees should participate in national health insurance from the date being employed. Otherwise, those who have established a registered domicile in Taiwan for at least six months, should hold the alien resident certificate to participate in national health insurance. Aforementioned, who have established a registered domicile in Taiwan for at least six months refers to a person who has, after entering into Taiwan, stayed in Taiwan for six consecutive months or exited Taiwan once for fewer than 30 days with the actual period of stay amounting to six months after the number of days that he or she has been away from Taiwan is deducted.
2.Foreign professionals who being employed to engage in professional work that meets with the Act for the Recruitment and Employment of Foreign Professionals, for their spouses, minor children or children who are over 20 years old but incapable of making a living, once they have their alien resident certificate, may participate in national health insurance, they will not be subjected to the six-month restriction.
3.Those who meets specified conditions to participate in national health insurance is compulsory to participate, otherwise additional payment will be charged and penalty.
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| | If you have any questions about the quotation and procedure, or need further information, please refer to our firm's official website: www.bycpa.com. You may contact us by email: enquiries@bycpa.com, or communication applications (WhatsApp, Line, WeChat, Phone number +852 6114 9414), or feel free to contact our professional consultants.
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