1 How do "residents of the ROC" file income taxes?
Residents of the ROC who have sources of income in the ROC or who have income from a foreign employer because of work performed in the ROC shall file income tax with the National Tax Administration for that tax year not later than 31 May of the following year. Taxes shall be paid using the progressive tax rate, based on total income minus exemptions and deductions.
2 How do "non-residents of the ROC" file income taxes?
Non-residents of the ROC who have income derived from ROC sources shall have taxes deducted from the taxpayer's income.
Income not subject to withholding, such as property sales, etc, must be reported and taxes filed in accordance with the law.
Non-residents of the ROC who have remained in the ROC for more than 90 days in a tax year must report and file income tax based on income received from ROC sources as well as income derived from foreign sources.
The tax rate shall be as follows:
1. The withholding tax rate on dividend distributed by a company or profit distributed by a cooperative is 30%. However, it would be 20% in the case of the investment which was approved in accordance with one of the following regulations:
(1)The Statue for Investment by Overseas Chinese.
(2)The Statue for Investment by Foreign Nationals.
(3)The Regulations Governing Securities Investment by Overseas Chinese and Foreign Investors and Procedures for Remittance.
2. The withholding tax rate on salaries is 20%.
3. The withholding tax rate on commissions is 20%.
4. The withholding tax rate on interest is 20%.
5. The withholding tax rate on rent is 20%.
6. The withholding tax rate on royalties is 20%.
7. The withholding tax rate on cash awards or payments given in contests or prizes of a chance winning is 20%.
8. The withholding tax rate on fees for professional services is 20%.
Additionally, income which is not subject to the withholding code shall be taxed at the following withholding tax rate:
1. Income from property transactions and profits from occasional trade shall be filed and taxed at the rate of 35%.
2. In transferring the stocks obtained in accordance with the article 16 of the Statue for Upgrading Industries, the par value of the stocks shall be deemed as the taxable income of year of transfer year. If the actual transfer price of such stocks at the time of sale or the market value of such stocks at the time of bestowal or distributions of estate is lower than the par value, the actual transfer price or the market value shall be deemed the taxable income. Such an income shall be filed and taxed at the rate of 30%. However such stocks obtained for the investments approved in accordance with the Statue for Investment by Overseas Chinese or the Statue for Investment by Foreign Nationals, as well as the Regulations Governing Securities Investment by Overseas Chinese and Foreign Investors and Procedures for Remittance, the taxable income shall be taxed at the rate of 20%.
3. Miscellaneous income shall be filed and taxed at the rate of 20%.
3 How is income derived from abroad for services rendered within the ROC reported for tax purposes?
Foreigners who derive income from abroad for services rendered within the ROC must report such income for income tax purposes. Proof of income derived from abroad must be provided to the Tax Administration using documentation from foreign tax authorities, certified accounting firm or legal representative (accountant and attorney must provide copy of license).
4 How is compensation calculated for foreign laborers?
Individual income tax for foreign laborers shall be based on tax withholding form and employment contract. Individual income tax for Filipino household workers shall be based on compensation as stated in contracts approved by the Philippine Labor Center of the Manila Economic and Culture Office.
5 Can taxes paid abroad be used as a deduction against taxes owed in the ROC?
ROC tax laws require tax payment on all income derived from ROC sources. Taxes paid to a foreign country may not be used as a deduction against taxes owed to the ROC government.
6 Can taxes paid in the ROC be used as a deduction against taxes owed to a foreign government?
Such determination must be made by each individual foreign government. If ROC taxes may be used as a deduction in a foreign country, the foreign tax payer may apply for proof of ROC income tax payment through the Tax Administration office in which s/he filed taxes.
7 How does a foreigner apply for English translation of income tax return filed?
When an alien taxpayer applies for an Individual Income Tax Certificate, he/she should show his/her passport or alien resident certificate to the national tax administration where he/she filed his/her ROC tax return. If the alien taxpayer can not apply in person, his/her agent should show the proxy statement which bears the signature as on the taxpayer's passport and a copy of the page from the holder's passport which bears his/her signature.
8 What documentation should be filed with a foreigner's income tax return?
Valid passport, tax withholding statement, certificate of residence and certificate of earnings paid abroad for services performed in the ROC, as well as supporting documentation for exemptions and deductions.
9 Must a married couple file jointly? How does a couple who marry or divorce midyear file?
1. Article 15 of the ROC Income Tax Law stipulates that the income of an alien's spouse must be filed jointly with that of the alien. However, the tax due on the spouse's salary may be calculated separately. In the case of spouses living in separately, either spouse may file the income tax return at the Foreign Affairs Office of the National Tax Administration in the district where he/she lives.
2. An ROC non-resident with income sources inside Taiwan and whose spouse is a resident of ROC, may file their income tax return jointly with their spouse or they may file separately, in which case they will be taxed at the rate charged to non-ROC residents. If the non-resident chooses to file his/her own income separately, his/her income should not be included in the gross income of the resident spouse. In addition, tax withheld or due to the non-resident taxpayer cannot be deducted or credited on the resident spouse's tax.
3. If a couple marries or divorces during the interim of the year, they may choose to file income tax returns jointly or separately for that fiscal year. A certificate of marriage or divorce is necessary when filing. Without double claming, the couple may decide who claims tax exemptions for dependants; otherwise the supporting spouse should file claims.
10 How will end-year reconciliation be handled for foreigners who already filed their individual income tax at midyear?
Taxes paid at mid-year may be used to offset income taxes owed at year end. Non-residents of ROC who were taxed at the flat nonresident tax rate at mid-year and then return in the same tax year and continue to stay in the ROC beyond a total of 183 days shall be re-assessed for taxes at the progressive rate for residents.
11 How will end-year reconciliation be handled for foreigners who terminate residency and leave the ROC prior to year-end?
Foreigners with ROC resident status shall file individual income tax prior to departure. Exemptions and deductions shall be prorated on the basis of number of days residing in the ROC during the tax year. If the foreigner is unable to file taxes prior to departure, s/he may appoint an individual residing in the ROC to file as representative. Individuals departing the ROC without payment of income taxes may be detained. If the spouse of the departing taxpayer is an ROC citizen remaining in the ROC, income taxes may be filed jointly the following year and deductions and exemptions may be taken based on the duration of stay of the spouse remaining in the ROC.
12 What is the penalty for not filing individual income tax on time?
If discovered by the Tax Administration, in addition to full payment of tax outstanding, penalty shall be levied at not more than 300% of the amount underpaid. If the individual comes forward before discovery by the Tax Administration, full payment of tax outstanding shall be levied, with interest.
13 What is the penalty for filing "short"?
If discovered by the Tax Administration, in addition to full payment of tax outstanding, penalty shall be levied at not more than 200% of the amount underpaid. In cases of fraud, the individual is subject to legal prosecution. If the individual comes forward before discovery by the Tax Administration, full payment of tax outstanding shall be levied, with interest.
14 What is penalty for late payment of individual income tax?
A 1% fine shall be charged for every two days late. After 30 days, the individual is subject to legal prosecution in addition to paying the fine, plus interest charged at the average annual rate for postal savings account. The individual shall also bear the cost of legal fees.
15 When are property taxes levied?
Property taxes must be paid yearly between November and 30 November.
16 What is considered residential property?
Residential property is property registered in the name of the taxpayer, his/her spouse or immediate family, which is used as personal residence and not as rental or commercial property.
17 By when must a property owner apply for special tax rate on residential property?
By 22 September or the new tax rate shall not take effect until the following year.
18 What is the tax rate for personal property tax?
Personal property is taxed at 0.2%.
19 What documentation is required in applying for qualification for personal property tax?
Submit copy of household registration (foreigners shall submit copy of ARC) and property improvement documentation.
20 When is property appreciation tax levied?
At the time of transfer of title, property appreciation tax shall be paid based on the amount of increase in property value.
21 What is the property appreciation tax rate for residential property?
At time of property title transfer, property which qualifies as residential property shall be taxed at 10% rate for property appreciation tax.
22 Is there a property size limit on residential property for property appreciation tax?
There is a limit of not more than 300 square meters of city property and not more than 700 square meters of rural property.
23 Are foreigners selling property bound by appreciation tax on residential property?
Foreigners whose property qualifies as residential, who have resided in the ROC for at least 183 days during the previous year and who have filed for residency shall pay appreciation tax on residential property when selling said property.
24 What documentation is required in filing property appreciation tax when a foreigner sells residential property?
Application for title transfer must be filed with the district Tax Bureau at least 30 days prior to closing. To file appreciation tax, submit description of residential property, copy of contract, title of ownership, as well as copy of ARC and passport.
25 When are building taxes levied? What is the tax year?
Building taxes must be paid in May. The tax year for building taxes is 1 July through 31 June of the following year.
26 How are property taxes calculated if the purpose of the building changes mid-year? How is the change registered? 2003/09/12
Property taxes shall be calculated on a monthly basis according to each category of use when the purpose of the building changes mid-year. Change of building purpose shall be filed within 30 days of such change with the district tax office via phone, fax or application form.
27 When are deed taxes filed?
Deed taxes must be filed at time of building purchase, sale, mortgage, trade, gifting, division or possession.
28 What are deed tax rates?
1. 6% for purchase or sale.
2. 4% for mortgage.
3. 2% for trade.
4. 6% for gift.
5. 2% for division.
6. 6% for possession.
29 Who is obligated to pay deed taxes? How are deed taxes filed?
The tax payer is the new owner of the property. The tax payer must file a deed tax return with the district tax office, the approved title transfer must accompany the tax return.
30 When are vehicle fuel and license taxes levied each year?
Taxes for privately owned vehicles (automobiles, scooters and motorcycles) must be paid during April of each year. Taxes for commercially owned automobiles are paid twice a year, in April and in October.
31 How are vehicle fuel and license taxes assessed?
According to vehicle type and cylinder size.
32 Are vehicles used by the physically handicapped exempted from vehicle fuel and license tax?
Vehicles with permanent fixtures to accommodate the physically handicapped are exempt from the vehicle fuel and license tax.
However, application for tax exemption must be filed prior to use.
Foreign Affairs Office
National Tax Administration of Taipei City
Ministry of Finance
Address: 1F, 2 Zhonghua Rd., Sec. 1, Taipei
Phone: 2311-3711 ext. 1116 or 1118
33 What deductions and exemptions are allowed in filing individual income tax?
Foreign residents of the ROC shall pay taxes using the progressive tax rate, based on total income minus exemptions and deductions.
For the 2002 tax year, categories of exemptions and deductions include:
1. There is an NT$ 74,000 exemption for each taxpayer, spouse and dependent. There is an NT$ 111,000 exemption for each dependent who is the taxpayer's lineal ascendant and over 70 years of age.
2. Deductions:
(1) General.
A.Standard deductions: There is an NT$ 44,000 deduction for a single person and an NT$ 67,000 deduction for each married couple filing a joint return.
B.Itemized deductions:
a. Donations. Deduction for donations may not exceed 20% of the taxpayer's consolidated gross income. Donations made to national defense or government are fully deductible.
b. Insurance premiums. Not to exceed NT$ 24,000 per person per year.
c. Medical and maternity expenses. Must be supported by official documentation.
d. Losses from disaster. Must be supported by official documentation.
e. Interest paid for a loan for an owner occupied dwelling. Limited to NT$ 300,000 and if the taxpayer also claims a special deduction for savings and investment, the special deduction should be subtracted from the interest.
f. Donation to private educational institutions. Not to exceed 50% of taxpayer's consolidated gross income.
(2) Special.
A. Losses from property transactions: Not to exceed gains from property transactions.
B. Special deduction for salary or wages. Not to exceed NT$ 62,000 per person per year.
C. Special deduction for savings and investment. Not to exceed NT$ 270,000 per household.
D. Special deduction for disability. NT$ 74,000 per person per year.
E. Special deduction for tuition. NT$ 25,000 per household per year.
Exemptions and standard deductions for residents of the ROC intending to depart and not return shall be prorated based on the number of days in which they have resided in the ROC in the tax year.
34 When should taxes be filed?
Tax payment periods for foreigners are different for different lengths of resident status in the ROC.
1. For those staying in the ROC for not more than 90 days, income tax payable shall be withheld directly from salary. However, if there is income derived from sources other than salary, taxes must be filed prior to departure or prior to request for extension of stay.
2. For those staying in the ROC for more than 90 days but less than 183 days, income tax payable shall be withheld directly from salary. However, if there is income derived from abroad for services rendered in the ROC or if there is income from sources other than salary, taxes must be filed prior to departure or prior to request for extension of stay.
3. For those staying in the ROC for 183 days or more, income tax shall be filed prior to 31 March for the previous tax year. In the event of midyear departure, income tax must be filed one week prior to departure.
35 Where do foreigners file individual income tax?
Income tax returns shall be filed with the district Tax Administration of the individual's local residence.
Those residing in Taipei City or Kaohsiung City shall file with the Foreign Affairs Office of the Tax Administration.
Information numbers for Tax Administration offices:
Taipei City：(02) 2311-3711 X 1116/1118
Kaohsiung City：(07) 725-6600
Taiwan-Northern District：(03) 339-6789
Taiwan-Middle District：(04) 329-1111
Taiwan-Southern District：(06) 222-3111
Income tax return for taxpayers who live and work in different counties may be filed by mail.
36 What is taxpayer's ID NO?
The taxpayer's ID NO. consists of two letters and eight Arabic numerals. The "ID NO." is either the code number printed on the "ALIEN RESIDENT CERTIFICATE".
For instance:
Robert W. Davidson, who owns the "ALIEN RESIDENT CERTIFICATE", and his code number on this certificate is AA12345678. It means his "Taxpayer's ID NO." is "AA12345678".
Carol Lee, who owns the "ALIEN RESIDENT CERTIFICATE", and her code number on this certificate is HB12345678. It means her "Taxpayer's ID NO." is "HB12345678".
37 What steps will the National Tax Administration take in the event of individuals not paying their income tax?
1. Notify appropriate central authority to stop transfer of personal property equivalent to amount of tax owed.
2. If the taxpayer hides or transfers personal property to avoid tax payment, notify the courts to impound personal property.
3. When the amount owed is significant, notify police authorities to detain individual and prevent departure from the ROC. However, if the taxpayer has provided adequate guarantee, such restriction shall be lifted.
4. When a foreigner owes taxes or has not secured a representative to file his/her individual income tax, the National Tax Administration shall notify the police authorities to detain the individual and prevent his/her departure from the ROC.
38 How is commercial tax reported by foreigners selling goods and/or service in the ROC?
1. Article 1 of the ROC Commercial Tax Laws governs taxation of sale and importation of goods and services
2. Foreigners engaged in trade of goods and/or services must first register with the district Tax Bureau and acquire Tong Yi Fa Piao(Uniform-invoice), which shall be used for each sales transaction. Earnings shall be reported to the district Tax Bureau on the 15th day of each January, March, May, July, September and November for the preceding two months. Any taxes owed shall be paid at the same time.
39 What benefits are available to foreigners who receive (Uniform-invoice) Piao for business transactions?
1. Participation in the Tong Yi Fa Piao(Uniform-invoice) lottery.A lottery is drawn on Tong Yi Fa Piao (Uniform-invoice) numbers on the 25th of alternating months and the winning numbers published in the following day's newspapers. Winners may claim their winnings within three months of the lottery drawing by presenting their passport and the winning ticket at financial institutions.
2. Participation in Tong Yi Fa Piao (Uniform-invoice) promotional activities.Foreigners may participate in promotional activities sponsored periodically by the Taipei City Revenue Service.
40 What are the requirements for qualification to pay at taxes at the residential property rate?
1. Property owner, spouse or immediate family member must have household registration in the local district.
2. Property is not used as rental or commercial property.
3. Not more than 300 square meters of city property and not more than 700 square meters of rural property shall qualify as residential.
4. All improvements on the property must belong to the owner, spouse or immediate family.
5. Limit of one property for each family of husband, wife and dependent family members.
41 What are the building tax rates?
1. Residential use. Taxes are levied at 1.2% of current building value.
2. Commercial use. Taxes are levied at 3% of current building value; an additional 1% of current value is levied for educational taxes.
3. Non-residential and non-commercial use (e.g., private hospital, clinic, private classrooms, consultant firms and civil organizations). Taxes are levied at 2% of current building value.
4. Multipurpose (residential as well as non-residential) use. Taxes are levied proportionately for residential and non-residential areas; however, for tax purposes, the non-residential area shall be no less than 1/6 of the overall building area.
Source : Taipei City Gov.
