TAIWAN
Taiwan Taxation System
Taiwan taxes can be generally categorized into (1) national taxes and (2) municipality, county and city taxes, and shown as below. Income tax, value-added tax, and customs duties for corporations and individuals are subject to national taxes, while land, building and acquisition taxes are included in local taxes. Taxes other than tariffs are collected from national tax offices under the Ministry of Finance, and local taxes are collected by tax offices under the respective local governments.
Type of tax
| National Tax | Local Tax |
|---|---|
| *Income tax | *Agricultural land tax |
| *Estate and gift tax | *Land value tax |
| Custom duties | *Land value incremental tax |
| Value-added tax | *House tax |
| Commodity tax | *Deed tax |
| Tobacco and alcohol tax | Vehicle license tax |
| *Security transaction tax | Amusement tax |
| *Future transaction tax | Stamp tax |
| Specifically selected goods and service tax | – |
* Direct tax
Taiwan Income Tax
Income tax is classified into income tax for individual taxpayers and profit-seeking enterprises.
Individual Income Tax
In general, individuals are taxed on their Taiwan-sourced income.
If you have lived in Taiwan for more than 183 days in a year, you will be classified as a resident under Taiwan’s tax code and will be subject to the minimum tax calculation on the income from sources outside of Taiwan.
Tax rates of 5 to 40 percent will be imposed depending on taxable income, and you can receive standard deductions, itemized deductions, and special deductions.
Corporate Income Tax
For profit seeking entities in Taiwan must report all business income from both onshore and offshore of Taiwan (worldwide basis).
The corporate tax rate is 20%. The corporation is required to report its profit for profit-making business for the previous year by filing a statement of settlement from May 1 to May 31 every year. If your fiscal year is not from January 1 to December 31, you should report your corporate tax within five months after the end of that fiscal year.
In case of an income sourced from outside of Taiwan, the income tax paid under the applicable country’s tax laws may be deducted from the total corporate tax payment amount, but not from any tax that exceeds the tax amount calculated at Taiwan’s applicable tax rate.
Withholding Tax
A withholding tax is an income tax paid to the government by the payer of the income rather than by the recipient. The tax is thus withheld or deducted from the income paid to the recipient. The withholding tax rate on income derived from the source of Taiwan for resident and non-resident recipients are summarized as below
| Type of Income | Resident | Non-Resident |
|---|---|---|
| Dividends | 0% | 21% |
| Salaries and wages, commission | 5% | 18% |
| Interests | 10% | 20% |
| Rental, royalties, professional fees | 10% | 20% |
| Prizes | 10% | 20% |
| Pension Income | 6% | 18% |
Value-Added Tax (VAT)
The business tax or VAT system in Taiwan is generally similar to many European countries. Except for specified in the tax regulations, VAT is levied on the sales of goods and services within the territory of Taiwan at each stage of the supply chain. The business tax levied on imported goods are calculated at the prescribed tax rate and the gross value after custom duty, commodity tax, or tobacco and alcohol tax if applicable. The business tax or VAT rate is summarized as the table below for reference.
| Type of Business | Tax Rate |
|---|---|
| Regular Tax Rate | 5% |
| Export goods and services | 0% |
| Income from reinsurance premiums | 1% |
| Night clubs and restaurants with entertainment | 15% |
| Coffee shops and bars offering companionship services | 25% |
| Wholesale agricultural traders or small agricultural product suppliers | 0.1% |
| Small-scale businesses | 1% |
Stamp Tax
The stamp tax is levied on receipts of payments, deeds of sales of movable properties and real estate transactions and contractual agreements. The type of documents and tax rates are summarized below.
| Document Type | Resident |
|---|---|
| Receipts of payments | 0.4% |
| Deeds of sales of movable properties | NTD$12 |
| Contractual agreements | 0.1% |
| Deeds of real estate transactions | 0.1% |
The person who signs or issues the document has the responsibility to pay the stamp tax. In case if both parties want to keep the original document, both parties would be required to pay the stamp tax for the original documents.
Commodity Tax
The commodity tax is a one-off tax levied upon specified commodities which are manufactured domestically or imported.
Securities Transaction Tax
Except for government bonds and specified tax-exempt securities, all the securities transactions are subject to the securities transaction tax.
| Type of Securities Transactions | Tax Rate (on selling price) |
|---|---|
| Shares and options | 0.3% |
| Transactions of futures | 0.000001% to 0.6% |
Annual Filing
| Interim income tax | Income tax | VAT | Withholding tax | |
|---|---|---|---|---|
| Frequency | Annual | Annual | Bi-monthly (may apply for monthly) | Tax payment: monthly Reporting: annually |
| Deadline | 30 Sep of the current year | 31 May of the following year | 15th calendar day of the odd month | Tax payment: 10th of the following month File to tax office: 31Jan of the following year |
| Tax amount | 50% of prior year’s income tax payable | Base on the profit of the preceding year | Output tax minus input tax | Tax withhold for the preceding month |
| File to | National Taxation Bureau | National Taxation Bureau | National Taxation Bureau | National Taxation Bureau |
| Audit required | Not required | – Revenue is over NTD$30m – Apply for loss carry forward – Listed company/specified industry | Not required | Not required |
| Interim income tax | Income tax | VAT | Withholding tax | |
|---|---|---|---|---|
| Frequency | Annual | Annual | Bi-monthly (may apply for monthly) | Tax payment: monthly Reporting: annually |
| Deadline | 30 Sep of the current year | 31 May of the following year | 15th calendar day of the odd month | Tax payment: 10th of the following month File to tax office: 31Jan of the following year |
| Tax amount | 50% of prior year’s income tax payable | Base on the profit of the preceding year | Output tax minus input tax | Tax withhold for the preceding month |
| File to | National Taxation Bureau | National Taxation Bureau | National Taxation Bureau | National Taxation Bureau |
| Audit required | Not required | – Revenue is over NTD$30m – Apply for loss carry forward – Listed company/specified industry | Not required | Not required |