In recent years, Taiwan has attracted more foreign investors and workers. Foreigners with income sourced in Taiwan are subject to Taiwan income tax. But only certain individuals have to file a tax return to remit tax payment. This article intends to serve as a guide on how foreigners file and pay their Taiwan income tax.
Individual income tax is levied on income derived from sources in Taiwan for both residents and nonresidents. This includes wages earned in Taiwan, interests from banks located in Taiwan (including branches of foreign banks in Taiwan), or dividends from Taiwanese corporations, etc. But whether or not foreign individuals have to file an income tax return depends on their residency status and the income type.
Residents or Non-Residents
Foreign individuals are considered resident for Taiwan income tax purposes if they meet one of the two requirements below.
- Physically present in Taiwan for 183 days or more in a calendar year (most common)
- Domiciled and regularly resides in Taiwan (less common*)
*Foreign individuals meet the second requirement if they get the Permanent Residence Certificate, completes the Household Registration in Taiwan, and stays in Taiwan for certain amount of days)
To File or Not to File
As a rule of thumb, residents are required to file annual income tax returns, and non-residents pay taxes through withholding and are generally not required to file tax returns. If residents leave Taiwan within a year, they are required to file before their departure or assign a qualified Tax Agent to file on their behalf.
However, nonresidents with Taiwan-sourced incomes which are not subject to withholding (such as capital gains, stock option gains, etc.) are required to file tax returns and remit taxes.
There is an exception to wages income eared in Taiwan and paid by foreign employers. Nonresidents who stays in Taiwan for no more than 90 days in a calendar year with service income eared in Taiwan and paid by offshore employers are not subject to Taiwan income tax (tax-free).
When to File
Taxpayers who have filing requirements are required to file tax returns of the preceding calendar year in May. If May 31 falls on Saturday, Sunday or national holiday, the deadline extends to the next business day.
How We Can Help Think-Do Better CPA Firm has been providing tax services since 1982. We assist corporations as well as individuals in not only complying to their filing requirements but maximizing tax savings. If you need help in filing your Taiwan income tax returns, we are more than happy to help.