[Taiwan] Taiwan Taxation

Tax System

  • Overview
    – Corporate : income sourced from onshore and offshore are subject to income tax
    – Individual : onshore income are subject to income tax ; offshore income are subject to alternative minimum income tax
    – Information exchange : tax information only exchanged with Japan, Australia and USA
  • Advantage
    – Corporate income tax is 20% which is lower than developed countries such as Japan, Korea and China
    – Business tax is 5% which is lower than Singapore, Japan, Korea and China
    – A good location for global wealth management due to limitation of information exchange with other countries

Taxation - Corporate

  • For entities registered in Taiwan, an income tax shall be levied on its total onshore and offshore income
  • In case the entity already paid income tax to foreign government for its offshore income, such paid tax may be deducted against the tax payable to Taiwan tax office (foreign tax credit)
  • Tax rate

    Income

    Tax Rate

    General onshore income

    20%

    General offshore income

    20%

    Undistributed earnings of preceding year

    0% for Taiwan branch ;

    5% for Taiwan companies

    Capital gain on sale of securities

    0%

    Dividend income

    0% for dividend received from Taiwan companies ;

    20% for dividend received from oversea companies

  • Income tax return due
    – Annual corporate income tax return due on 31 May of following year for the year ended on 31 Dec
    – Provisional income tax due on 30 Sep of current year for the year ended on 31 Dec
  • Loss carryforward
    – Loss can be carry forwarded to against the profit for future 10 years
    – Income tax return must be audited by a CPA for loss and profit years
  • Audit requirement
    Corporate income tax return must be audited if :
    – Financial institutions, e.g. banks, security and insurance companies
    – Public companies
    – Tax-exempted companies with sales over NTD$50 millions
    – Annual sales over NTD$100 millions

Taxation - Individual

 

Days in Taiwan0~90 days90~182 days183~365 days
Resident statusNon-residenceResidence
Onshore income
Tax rate18~21% depends on income type5~40%
Offshore payment for service provided in TaiwanNon-taxableTaxable
Submit for tax return required ?NoNo(but yes if income was not subject to withholding)Yes
Deadline for tax returnNANA(if yes, the early of 31 May or 1 week before departure)The early of :31 May or1 week before departure
Offshore income
Tax rateNon-taxable20%(Alternative Minimum Tax)
Submit for tax return required ?NoYes
Deadline for tax returnNoThe early of :31 May or1 week before departure

Exemption

Apply to

Amount (NTD$)

Exemption

Taxpayer, spouse and dependents

Fixed. 88K, 132K for age 70

Special Deduction

 Apply to

Amount (NTD$)

Salary

Taxpayer, spouse and dependents

Max. 200K

Interest

Taxpayer, spouse and dependents

Max. 270K

Tuition

Dependents in college level above

Fixed. 25K

Sale property loss

Taxpayer, spouse and dependents

Max. gain amount

Child

Dependents of age 5 below

Fixed. 120K

  • Income Tax Payable

Taxable Income × Tax Rate – Accumulated Difference

  • Alternative Minimum Tax (AMT)

(Taxable Income + Exempted Income – NTD$ 6,700,000)×20%

Taxable Income (NTD$)

Tax Rate

Accumulated Difference

0~540,000

5%

0

540,001~1,210,000

12%

37,800

1,210,001~2,420,000

20%

134,600

2,420,001~4,530,000

30%

376,600

4,530,001~above

40%

829,600

 

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