Paying Taxes in Taiwan

The Taiwan Tax Office certainly does its bit to help foreigners pay their taxes. By comparison to overseas, paying taxes in Taiwan is fairly painless, if not exactly a pleasure. 

By Stuart Hill

XiMen MRT Station

The Taipei Tax Office in ZhongZheng District is roughly 5 minutes walk from the XiMen MRT station’s Exit 5. Head north along ZhongHua Road toward ZhongXiao West Road.

You certainly have to give the tax office credit for the lengths it takes to make sure you love paying the government money. In fact, they have the psychology of the situation understood perfectly to the point that you almost can’t wait to visit them again the following year.

Whether it’s the staff filling in your forms, the automatic print out of all your tax related income and deductions, the on-site ATM payment system, or the fact the whole lodging process can take less than 20 minutes, it certainly makes a refreshing change to the way typical interactions with government agencies seem to play out. Is it because people want something from all the others departments?

Regardless of why it is, the staff at the Taipei Tax Office on ZhongHua Road, certainly have an infectious attitude, and considering they are dealing with frustrated and reluctant customers, manage to do a pretty good job.

Here’s one example of how enthusiastic tax officials are in Taiwan.

The main taxation office in Taipei’s “central” district (中正區) provides a one-stop-shop service dedicated to helping foreigners. Volunteers will fill out your tax forms on the spot — something literally unheard of in other countries.

Taipei Tax Office

The Taipei Tax Office on ZhongHua Road is a nondescript office building that decries the friendly service of its office staff.

Alternatively, foreigners can now use the online tax filing system, so-called e-filing, which requires special downloadable software to run  (available on the tax office’s website). However, by using the e-filing system, you need to submit all your bank and salary income slips by mail, which you can avoid by submitting your return in person at the tax office.

While online information is not very easy to navigate, the Taiwan Tax Office does provide all the information needed to submit a tax form. Multi-lingual instruction booklets are printed each year, while lists outlining required documents and the tax return itself, are provided in English. So despite all the on-site support, its surprising how minimal professional help is needed to submit your tax return (assuming you follow all standard deductions and entitlements).

If you have stayed in Taiwan for more than 183 days in one calendar year, the tax you pay on your annual earnings is set at the local rate. For those that have been working for less than 6 months, you will have to pay tax at the flat rate of 18%, with 20% applied to investments and savings.

Taiwan Tax Rates

The progressive tax rates in Taiwan start at 5 per cent for earnings under NT$520,000, while the top rate of 40 per cent applies to earnings over NT$4.4 million.

However, by residing in Taiwan for 183 days or more you are treated as a resident for taxation purposes, and follow the tax rate for your particular salary bracket. Over the years, the rate has been adjusted (up), but the progressive scale starts at 5% for salaries under roughly half a million dollars, with the top rate of 40% for salaries of NT$4.4 million and above.

The government allows for a limited number of deductions but with certain limits, which include things like donations, insurance premiums, some school fees, medical and maternity expenses, losses from disasters, mortgage interest on a home-occupied house loan, rental expenses for accommodation, disability deductions, interest on postal savings and government bonds, and more.

Taiwan Tax Office Forms

In addition to providing a list of the documents required to submit a tax return, the Taiwan Tax Office produces its tax return forms in English.

However, the tax office attempts to simplify the calculation by providing a generic “deduction” of $85,000 for individuals or $127,500 if you have dependents, and a combined amount for married couples. There are also certain tax exemptions for income derived from scholarships, creative works (like writing), and various forms of income derived from governments (both in Taiwan and foreign governments). Neither deductions nor exemptions are applied to non-residents.

It’s wise to pay your taxes before the end of May as you will be charged interest for late payment.

There is in fact a lot of information written in English that can help with lodging your taxes — but the websites dedicated to explain how to do are generally poorly designed and even more poorly translated.

Official Tax Statement

An official tax statement is good to have if you are negotiating a new salary or need to prove that you are a good credit risk. Of course, you will need this kind of document if you are applying for permanent residence.

Some Tips for Paying Taxes in Taiwan

  • Lodge before the deadline of May 31 — or risk paying interest on what you owe
  • Collect all tax receipts from your place of employment, your banks, and other places of investment
  • Bring your passport with you if lodging in person
  • Remember to lodge a tax return form if you are leaving the country permanently
  • Ask the staff to make a photo copy of your submitted tax form
  • Get an official record of the tax you have paid — it is proof of your earning capacity if you are negotiating a salary at a new job, going for a home loan, etc.

Additional Information About Paying Taxes

  • Visit the Taipei Tax Office in person at: 台北萬華區中華路1段2號1樓 (1F No. 2, ZhongHua Road, Section 1, WanHua District, Taipei)
  • Tax office website: http://www.ntbt.gov.tw

Post-script:
In the heady years when IT salary packages were made up of a huge proportional of company shares, the tax on the shares was nil. In 2010, the government began taxing these kinds of bonuses at an “income” value set against the price on the day they were issued. Good news if the shares were released when the price was low and sold when the market rose. Obviously bad if they were issued when the market was high and sold after a crash. The changes basically killed the practice of issuing stock bonuses and since then has made the IT industry less attractive to foreign employees. It also significantly increased taxes paid by workers in the IT industry who were essentially enjoying tax-free income.

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4 responses to “Paying Taxes in Taiwan

  1. Glad you enjoyed the process, Stuart!

    Even though I no longer file as a foreigner possessing an ARC, doing taxes as a local is super easy too. I utilize the 自然憑證 card that prints out ALL my income, tax-deductibles, hospital fees, etc. Then, I simply bring this to the student volunteers operating on the 6F and voila!

    Speaking of which, last year the Tax Office hadn’t synched up with many medical institutions. But lo & behold when I filed taxes this year, all 2013 visits to amazing acupuncturists, Tui Na specialists operating in dark alleys, and hospitals of all sizes paraded out their fees effortlessly.

    Any gov’t would love to have this kind of system intact for their fellow citizens!

    • Thanks for the insight Ed. I have been wondering what kind of service the tax office provides to citizens too! Nice to hear it is pretty consistent.

  2. The tax rate has been adjusted both upwards and downwards. When I first arrived in Taiwan (1997), the base tax rate was 6%.

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