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Instructions for 2020 Alien Individual Income Tax

Date: 2022-03-22

1. Alien individual income tax and the period of residence

For any alien having income from sources in the Republic of China (R.O.C.), individual income tax shall be levied on the income derived from such sources in accordance with the Income Tax Act of the R.O.C. Alien taxpayers can be categorized as “Non-Residents of the R.O.C.” and “Residents of the R.O.C.” based on their length of stay. The different ways for aliens to file income tax returns are listed below.

(1) “Non-Residents” of the R.O.C.

  1. For an individual who stays in the R.O.C. not more than 90 days within a taxable year (January 1st to December 31st), the income derived from sources in the R.O.C. shall be withheld according to the withholding rate (see Article 15) and paid at the respective sources. The taxpayer need not file an income tax return. However, if an individual has income derived from property transaction, occasional trade, interest from mortgages, etc., he/she should declare and pay tax prior to departure.
  2. For an individual who stays in the R.O.C. over 90 days but less than 183 days within a taxable year, individual income tax shall be declared and computed according to the withholding rate (see Article 15) on his/her income derived from sources in the R.O.C., including the remunerations derived from abroad for his/her services rendered in the R.O.C.

(2) “Residents” of the R.O.C.

An individual who stays in the R.O.C. for 183 days or longer within a taxable year is regarded as a resident, and the individual income tax shall be declared and assessed by a progressive rate (see Article 14) on the amount of his/her net consolidated income (taxable income) which shall be the annual gross consolidated income (including the various incomes derived within the R.O.C. and the remunerations derived outside the R.O.C. for services rendered in the R.O.C.) minus the exemptions, deductions, and basic living expense difference.

2. Income from sources in the R.O.C.

The following categories are considered income from sources in the R.O.C.

(1) Dividends distributed by companies incorporated and registered in accordance with the Company Law of the R.O.C. and by foreign companies authorized by the Government of the R.O.C. to operate within the R.O.C.

(2) Profits distributed by profit-seeking enterprises organized in the form of a cooperative or a partnership within the R.O.C.

(3) Remunerations for services rendered by an individual within the R.O.C. and income derived from employer(s) outside the R.O.C. for services rendered in the R.O.C. for those who have stayed in the R.O.C. over 90 days within one taxable year (See Notes).

   Notes:

  1. Salaries and wages is one kind of remunerations which means income derived in respect of employment exercised or work performed, including salaries, stipends, wages, allowances, annuities, endowments, bonuses and or any other similar subsidies or compensations.
  2. From 2019, each person receiving salaries and wages may claim a special deduction for salary and wages up to a maximum of NT$200,000 or the necessary expenses directly related to performing duties or doing work and borne by the recipient to be deducted from his or her salaries and wages in accordance to Subparagraph 1, Category 3, Paragraph 1 of Article 14 of the Income Tax Act. For filing the necessary expenses deducted from salaries and wages, please submit the “2021 Application for Necessary Expenses Deducted from Salaries and Wages” and other supporting documents when declaring.

  Special deduction for salary and wages shall not apply to the income from salary and wages calculated in accordance with necessary expenses deducted from salaries and wages when calculating the tax payable in accordance with Article 15 and calculating the net consolidated income in accordance with Article 17 of the Income Tax Act.

  1. Based on the Article 20 of Act for the Recruitment and Employment of Foreign Professionals, from 2018 if a foreign professional engaging in professional work and meeting certain requirements has no household registration in the R.O.C. and has for the first time been approved to reside in the R.O.C. for the purpose of work or has obtained an Employment Gold Card, and during the period of validity of the Employment Gold Card is employed to conduct professional work, then within 5 years starting from the tax year in which the foreign special professional for the first time meets the conditions of residing in the R.O.C. for 183 days or more, and having a salary income of over NT$3,000,000, half of the amount of the salary income exceeding the NT$3,000,000 of each such tax year in which he/she resides in the R.O.C. for 183 days or more may be excluded from the gross income for the assessment of individual income tax liability. Overseas income is excluded from the income basic tax. Please submit the “Application for Exemption from Income Tax for Foreign Special Professionals” and other supporting documents when declaring.

(4) Professional income for performances or services rendered by the practitioner of a profession within the R.O.C.

(5) Interest obtained from governments of various levels of the R.O.C., from juristic persons within the R.O.C., and from individuals residing in the R.O.C.

(6) Rentals obtained from the lease of property situated within the R.O.C.

(7) Royalties obtained from patents, registered trade-marks, copyrights, secret formulas and franchises by virtue of their being made available for use by other persons within the R.O.C.

(8) Gains from the transaction of properties within the R.O.C.

(9) Profits from the operation of industry, commerce, agriculture, forestry, fishery, animal husbandry, mining, and metallurgy enterprises within the R.O.C.

(10) Prizes and awards obtained from participating in various contests of skill, games, lotteries, etc. in the R.O.C.

(11) Payments for retirement, severance, separation, resignation, life-time pensions, old-age pensions not covered by insurance benefits, and the insurance payments made under annuity insurance according to the Labor Pension Act received by a person, but not including the following: legitimate savings made by the said person from the taxable income of his or her salary every year; the insurance payment from the voluntary annuity insurance premiums according to the Labor Pension Act every year; and/or the interest accrued from the above- mentioned savings and the premiums.

(12) Any other income obtained within the territory of the R.O.C.

3. Definition of “taxable year”

A full year from January 1st to December 31st  is a taxable year.

4. Computation of residence

The computation of an alien’s period of residence in the R.O.C. is based on the dates stamped on his/her passport or the Certificate of Entry and Exit Dates issued by the National Immigration Agency, Ministry of the Interior (excluding the date of arrival and including the date of departure). If an alien enters and exits this country a number of times within a taxable year, the period of residence shall be the total number of accumulated days.

5. Determination of income

For an alien who remains in the R.O.C. within one taxable year:

(1) Not more than 90 days:

  1. The income tax shall be withheld at the income sources or declared and taxed in accordance with the withholding rate.
  2. The income tax shall be exempted for income derived from employer(s) outside the R.O.C.

(2) More than 90 days:

  1. The income derived within the R.O.C. shall be filed in accordance with a withholding statement as declared by the taxpayer.
  2. Income paid by an employer outside the territory of the R.O.C. must also be reported by the taxpayer. The taxpayer will be required to submit a certificate of earnings notarized by the tax authorities concerned from the employer(s) outside the territory of the R.O.C. If a certificate from the tax authorities is not available, a notarized certificate issued by a notary public or certified public accountant (CPA) is acceptable. In the case where such a certificate is to be used, a photocopy of the license of the CPA who issued the certificate must also be submitted. If the taxpayer fails to submit a certificate of earnings issued by the tax authority or certified by a notary public or CPA, the tax office will assess the amount payable according to the standard amounts. Any income received in foreign currency should be exchanged into New Taiwan Dollars (NT$) on the basis of the official foreign exchange rates or prevailing transfer rates at the time the income is actually or constructively received.

6. When tax payment is due

The tax payment due is different for aliens staying for different lengths of time in the R.O.C.

(1) For an individual staying in the R.O.C. for not more than 90 days, the income tax payable shall be withheld directly at the time of payment by the withholder in accordance with the withholding rate. However, in the case that an individual has sole or additional income deriving from sources to which such procedure for withholding is not ordinarily applied, such as profit from exercising stock options, interest from mortgages, etc., he/she should declare income and make the tax payment before his/her departure.

(2) For an individual staying in the R.O.C. over 90 days but less than 183 days, the income tax payable shall be withheld directly at the time of payment by the withholder in accordance with the withholding rate. (The employer is responsible for the preparation of a “Withholding & Non-Withholding Tax Statement,” which will be required when the taxpayer is filing a tax return.) Furthermore, income derived from abroad for services rendered within the R.O.C., or any income not applying to the withholding procedure mentioned above, such as profit from exercising stock options, interest from mortgages, etc., should be declared and tax should be paid before departure.

(3) Any individual staying in the R.O.C. for 183 days or longer shall file the annual income tax return of the previous year from May 1st to May 31st of the current year(if May 31st falls on Saturday, Sunday, a national holiday, or any other holiday, the due day extends to the next workday).

However, any individual who intends to leave the territory of the R.O.C. in the interim of the year and will not return within the same taxable year shall file his/her income tax return around 10 days before his/her departure.

7. Tax services

(1) An alien shall file his/her individual income tax return to the tax authority with jurisdiction over the location of the address given on his/her Alien Resident Certificate.

(2) An alien who stays in Taipei City shall file his/her tax return at the Foreign Taxpayers Section, National Taxation Bureau of Taipei, Ministry of Finance: No. 2, Sec. 1, Zhonghua Rd., Taipei City.

8. Filing individual income tax return online

Any alien (excluding Mainland Chinese) with a valid resident certificate and ARC No. issued by the National Immigration Agency may file an individual income tax return online for the year 2021 from May 1st, 2022 to May 31st, 2022. After downloading the electronic tax-filing program at https://tax.nat.gov.tw, taxpayers can log into the system via an Alien Citizen Digital Certificate, Registered National Health Insurance Card with password, a Financial Certification Authority (Financial CA), or by entering the ARC No. and Passport/Resident/Permit No. as specified on the ARC as of January 31st, 2022, and follow the instructions given in the program to file income tax returns online. If any document is required for filing, taxpayers shall submit it in person or send it by post before June 10th, 2022.

9. The method adopted to compute income tax in the case that income tax was initially paid and filed while the alien had stayed less than 183 days, and then the said alien continued to stay for 183 days or longer in the same taxable year

If the alien left the R.O.C. after he/she had been taxed at the flat rate for non-resident status, and then returned in the same taxable year and continued to stay in the R.O.C. up to 183 days or longer, the tax payable for that year shall be reassessed at the progressive rate for resident status. Tax previously paid will be credited.

10. The papers and documents to be submitted when filing individual income tax

A valid passport, tax withholding statement, dividend statement, certificate of residence, and certificate of earnings paid abroad for services rendered in the R.O.C. are basic data. Furthermore, if a taxpayer with special qualifications seeks to apply for tax exemptions or deductions, the proper documents of evidence should be submitted to the tax authorities for tax assessment.

11. Scope of exemptions

The following categories of income can be exempted by submitting the necessary documents:

(1) Scholarships and subsidies granted by governments of the R.O.C. or foreign governments; international institutions; educational, cultural, and scientific research organizations or associations; and other public or private organizations for the encouragement of advanced studies, research, or participation in scientific and professional training, except for the scholarships or subsidies received as remuneration by the taxpayer for service rendered to the grantors.

(2) Income, derived by virtue of office, of foreign diplomatic officials, consular officials, and other persons entitled to treatment accordable to diplomatic officials in the service of foreign embassies, legations, and consulates in the R.O.C.

(3) Income, derived by virtue of office, of employees other than diplomatic officials, consular officials, and persons entitled to diplomatic treatment, who, being nationals of a foreign country, are employed by the embassy, legation, or consulate of their country or by subsidiary agencies thereof in the R.O.C. provided that reciprocal treatment is accorded by the foreign country concerned to employees of Chinese nationality, employed by embassies, legations, or consulates of the R.O.C. or by subsidiary agencies thereof, in the foreign country concerned.

(4) Salaries paid by foreign governmental agencies, organizations, or educational and cultural institutions to foreign technicians and professors of universities and colleges for services rendered within the territory of the R.O.C. under technical cooperation or cultural and educational exchange agreements made by and between such foreign governmental agencies, organizations, or educational and cultural institutions and those of the R.O.C.

(5) Income derived from written articles, copyright books, musical compositions, musical productions, dramas, cartoons, or as remuneration for speeches and lectures on an hourly basis. However, the total amount of such income for the whole year shall not exceed NT$180,000.

(6) Various payments paid to personnel engaged in handling various kinds of examinations held by governmental agencies or academic organizations as commissioned by such agencies and in entrance examinations held by public and private schools of various levels.

For more details about exempt income, please

refer to Article 4 of the Income Tax Act.

12. The applicable deductions for a resident of the R.O.C. in filing his/her income tax returns of 2021

Residents of the R.O.C. are entitled to have the following exemptions and deductions:

(1) Exemption: There is an NT$88,000 exemption for each taxpayer, spouse, and dependent. In the case that the taxpayer, his/her spouse, or their lineal ascendants have attained seventy years of age, the exemption will be NT$132,000. The dependents must be:

  1. Lineal ascendants of the taxpayer or his/her spouse having attained sixty years of age or being incapable of earning a livelihood and being supported by the taxpayer.
  2. Children of the taxpayer who are minors, or who, although having attained the age of majority, are being supported by the taxpayer by reason of their studying in school, or having physical or mental disability or being incapable of earning a livelihood.
  3. Brothers and sisters of the taxpayer or his/her spouse who are minors,, or who, although having attained the age of majority, are being supported by the taxpayer by reason of their studying in school, or having physical or mental disability, or bring incapable of earning a livelihood.
  4. Other relatives or members of the family of the taxpayer within the meaning of Subparagraph 4, Article 1114, or Paragraph 3, Article 1123 of the Civil Code who are minors, or who, although having attained the age of majority, are actually being supported by the taxpayer by reason of their studying in school, or having physical or mental disability, or bring incapable of earning a livelihood, and live together with and depend on the taxpayer.

To claim exemption for the spouse or the dependent (excluding other dependents, i.e., aunt or uncle, cousin, grandchild, and nephew or niece) who does not reside with the taxpayer in the R.O.C., the household registration or the official certificates of the dependent should be submitted.

(2) Deductions: A taxpayer may select either the “Standard Deduction” or “Itemized Deductions” and may, in addition thereto, declare special deductions:

  1. Standard Deduction: There is an NT$120,000 deduction for a single person and an NT$240,000 deduction for a married couple filing a joint return (even if only one of the couple had income).
  2. Itemized Deductions: Original receipts for (a) to (f) deductions below must be attached.

(a) Donation: Donation made to officially-registered educational, cultural, or public welfare and charitable organizations or agencies is deductible. The deduction should not be more than 20% of the gross consolidated income. However, donation made to national defense, for troop morale, to the government, or for the maintenance and repair of antiquities or historic constructions under Article 101 of the Cultural Heritage Preservation Act is fully deductible. The taxpayer should provide evidence of official registration.

(b) Insurance Premiums: Premiums paid for life insurance, labor insurance, national annuity insurance, employment insurance and insurance for military personnel, public functionaries and teachers, of the taxpayer, his/her spouse, and their lineal dependents filing jointly are deductible. However, the deductions, excluding those for national health insurance, shall not exceed NT$24,000 for each person per year; premiums paid for national health insurance are fully deductible.

(c) Medical and Maternity Expenses: Medical and maternity expenses incurred by the taxpayer, his/her spouse, and their dependents filing jointly and supported by the taxpayer are deductible, provided that the payment so made is limited to public hospitals, specially contracted hospitals or clinics for the National Health Insurance, or those hospitals having complete and correct accounting records as recognized by the Ministry of Finance. However, no deduction shall be allowed for the portion covered by insurance payments. Claims for deductions of fees paid to foreign hospitals must be supported by evidence of the officially registered status of the hospital concerned. From July 6th, 2012, a taxpayer, his/ her spouse, or any dependent in a joint return, who needs long-term nursing services due to lack of capacity to take care of themselves, may submit the medical payment receipts from the hospitals or clinics mentioned above for the deduction.

(d) Losses from Disasters: Losses from disasters or force majeure inflicted on the taxpayer, his/her spouse, and their dependents filing jointly are deductible. However, no deduction may be made for the portion of losses where insurance benefits and/or relief have been received. To claim a deduction, the taxpayer should apply to the tax authorities for an investigator to appraise the losses within 30 days after the occurrence of the disaster.

(e) Mortgage Interest Paid on a Loan for an Owner-Occupied Residence: A taxpayer, his/her spouse, and their dependents filing jointly borrowing money from a financial organization to purchase a house or other property in the R.O.C. for use as an owner-occupied residence may deduct the interest paid on the loan from the gross income on one filing unit per year up to a limit of NT$300,000. Such a deduction is limited to one house or other property only. However, if the taxpayer also claims a special deduction for savings and investment (please refer to item (c) of C. of (2) of Article 12), the special deduction should be subtracted from the above-mentioned interest.

(f) Rental Expense: Rent for housing in the R.O.C. paid by a taxpayer, his/her spouse, and their lineal dependents filing jointly and used as their own residence rather than for business or performing professional services, may be deducted from their consolidated income up to and within a limit of not more than NT$120,000; however, no deduction can be claimed if he/she also claims the deduction for mortgage interest paid on a loan for an owner-occupied residence. To deduct the rental expense, the following documents must be attached:

  1. Copy of the lease contract and payment receipt (such as receipt from landlord, ATM receipt, or remittance paper).
  2. The certificate of a family member who has registered residence in the Household Registration Office or registered residence on the ARC for the related fiscal year, or the taxpayer’s written statement to state that the house is for self-used residence only.
  3. Special Deductions:

(a) Special Deduction for Property Transaction Losses: Losses from property transactions may be deducted from the gains from property transactions for the same year. However, losses arising from the sale of land or securities are not deductible. If the deductible amount exceeds the gains, the difference may be carried forward for up to three years.

(b) Special Deduction for Savings and Investment: Interest derived from deposits made in financial institutions and profits accrued from trust funds with the nature of savings, as well as dividends occurred from the transaction, gift, or inheritance of the tax-deferred stocks divided before December 31st, 1998 received by a taxpayer, his/her spouse, and the dependents filing jointly listed in his/her gross income return for taxation may be exempt from income tax in full, if the total amount of such income for the whole year does not exceed NT$270,000. If the amount exceeds NT$270,000, the deduction shall be limited to NT$270,000. However, the following kinds of interest are excluded from the special deduction for savings and investment:

  1. The interest accrued from postal passbook savings under the provisions of the Post Savings and Remittances Act;
  2. The interest derived or accrued from government bonds, corporate bonds, financial bonds, and short-term commercial papers;

iii. The interest derived from asset-backed securities issued in accordance with the Financial Asset Securitization Act and the Real Estate Securitization Act;

  1. The interest derived from repo (RP/RS) trade whereby an individual purchases securities or short-term commercial papers as listed in preceding items ii. and iii from January 1st, 2010.

(c) Special Deduction for Disability:

There is an NT$200,000 deduction for each taxpayer, spouse, and dependent who is a mental patient or a disabled person. A copy of the disability identification issued by the relevant authority of the R.O.C. in accordance with the provision of applicable laws should be attached when claiming this deduction.

(d) Special Deduction for Tuition:

The taxpayer may claim a maximum deduction of NT$25,000 for each child attending college/university (the student certificate and tuition receipt should be attached when claiming the deduction). However, no deduction can be claimed for a child who is attending an open university, an open junior college, or a five-year junior college for the first three years, as well as collecting a government subsidy.

(e) Special Deduction for Pre-School Children: A taxpayer who has children under or equal to 5 years of age may claim the special deduction of NT$120,000 per child per year if his/her circumstances do not fall under any of the conditions. (see Notes)

(f) Special Deduction for Long-Term Care: From 2019, the taxpayer, his or her spouse or any dependent who has a physical or mental disability and requires long term care services, as announced by the Ministry of Health and Welfare, shall submit the relevant documents to claim the special deduction of NT$120,000 per person per year if his/her circumstances do not fall under any of the conditions. (see Notes)

Notes:

  1. After deducting the pre-school deduction and long-term care deduction, the taxpayer’s tax rate is equal to or greater than 20% or the tax rate of the taxpayer’s or his/her spouse’s separately computed salary or categorized income is equal to or greater than 20% (opting for the single tax rate of 28% on the total amount of the dividends and earnings computed separately is also included).
  2. The amount of the basic income of the taxpayer is greater than NT$6,700,000.

(3) Basic Living Expense Difference: The total basic living expense shall be calculated in accordance with the expense of basic living for each person, NT$192,000 announced by the Central Authority in 2021, multiplied by the number of taxpayer, spouse, and dependents in one tax return. If the amount of basic living expense is higher than the sum of exemptions, standard deduction (or itemized deduction), special deduction for savings and investment, special deduction for disability, special deduction for tuition,  special deduction for pre-school children, and special deduction for long-term care, the difference can be used as an additional deduction from the gross consolidated income.

If a resident of the R.O.C. intends to depart and will not return within the same calendar year, the amounts for exemptions, standard deduction, and basic living expense shall be calculated in proportion to the total number of days he/she stayed in the R.O.C.

13. Deduction for Investing in Innovative Startups

For an individual who invests at least NT$1 million in cash in one year in R.O.C.'s innovative startups which have been incorporated for less than two years and identified by the central authority in charge of relevant enterprises as high- risk innovative startups, and acquires and holds the new shares issued by the company for two years, up to 50 percent of the investment may be excluded from the individual’s consolidated income for the year in which the second anniversary of such shareholding falls. The aggregate amount excludable from an individual’s consolidated income each year shall not exceed NT$3 million. (Please submit Certificate of Deduction for Investing in R.O.C.'s Innovative Startups" issued by National Taxation Bureau when declaring)

14. Tax due on a resident of R.O.C

A taxpayer should file the gross consolidated income of himself/herself, his/her spouse, and his/her dependents jointly. However, a taxpayer shall choose one of the ways listed below to calculate the tax payable:

(1)To calculate the tax payable jointly.

(2)To calculate the tax payable either on his/her salary or his/her spouse’s salary separately, and then declare and pay the amount of tax together. In this case, only the tax-exempt amount may be deducted from the salary income computed separately, whereas all other exemptions and deductions applicable to the person whose salary income is computed separately shall be declared in the tax return of the taxpayer.

The taxpayer may not make a duplicate claim for an exemption of the person whose salary income is computed separately when computing the amount of income tax payable by him/her.

(3) The taxpayer can choose, on the other hand, to calculate tax due by separating one's categorized income (with his/her exemption, relevant special deduction for property transaction losses,  for savings and investment,  for disability,  special deduction for pre-school children, and for long-term care), and then declare and pay the amount of tax jointly. Special deduction for savings and investment should first be deducted from the other one's and dependents' interest income within the limitation of NT$270,000, and then the residual, if any, can be deducted from one's categorized income. As to the special deduction for property losses, such deduction is limited to personal transactions, as well as relevant property gains.

From January 1st, 2018, tax payable of a taxpayer, his/her spouse and dependents computed in the annual income tax return may be offset from the amount of tax credit, based on 8.5% of the total amount of the dividends and earnings distributed by a company, a cooperative, or other juristic person in the year 1998 or each ensuing year thereafter, with the credit ceiling set at NT$80,000 per year per income tax return.

The taxpayer could opt to calculate the tax payable separately in accordance with the single tax rate of 28% on the total amount of the dividends and earnings, and such tax payable shall be included in the consolidated income tax return filed by the taxpayer and excluded from the above-mentioned calculation method and from the preceding paragraph tax credit.

 

15. Progressive tax rates (Unit: NT$)

Table of Progressive Tax Rates for Year 2021

Net Taxable Income

 

Tax Rate

 

Progressive Difference

 

Tax Payable

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

~

and above

×

 

40%

829,600

=

 

 

 

 

16. Regulations applicable to non-residents of the R.O.C.

(1) The withholding tax rate on dividend distributed by a company, profit distributed by a cooperative, earnings payable by a profit-seeking enterprise organized as a partnership to its partners each year, or earnings from a profit-seeking enterprise organized as a sole proprietorship each year is 21%.
(2) The withholding tax rate on salaries is 18%.
In the case that the monthly salaries in full amount are equal to or lower than one and a half times of the monthly baseline salary as assessed by the Executive Yuan, the withholding tax rate is 6% from January 1st, 2009.
(3) The withholding tax rate on commissions is 20%.
(4) The withholding tax rate on interest is 20%. However, the kinds of interest listed below shall be withheld in accordance with their associated regulations:
A. The portion of the pecuniary amount realized by short-term commercial papers at their maturity in excess of the selling price at their initial issuance is deemed as income from interest and shall be withheld by 15%.
B. The interest distributed from beneficiary securities or asset-backed securities issued in accordance with the Financial Asset Securitization Act or the Real Estate Securitization Act shall be withheld by 15%.
C. The interest accrued from government bonds, corporate bonds, and financial bonds shall be withheld by 15%.
D. The interest derived from repo (RP/RS) trade whereby an individual purchases short-term commercial papers or securities as listed in the preceding items A., B., or C. shall be withheld by 15% of the net amount of the sale price at maturity in excess of the original purchase price.
(5) The withholding tax rate on rentals 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 won by chance is 20%. However, taxation is exempted when the prize is not more than NT$5,000 from lottery tickets or uniform invoices issued under the auspices of the government.
(8) The withholding tax rate on the remuneration to a professional practice is 20%.
(9) After deducting any regulated exemption, retirement payments or pensions shall be withheld at the rate of 18%.
(10) The withholding tax rate on payment of reward for information or accusation is 20%.
Additionally, income which is not subject to the Withholding Code shall be filed and taxed in accordance with the following:
(1) Income from property transactions shall be filed and taxed at the rate of 20%.
(2) Profits from exercising stock options shall be filed and taxed at the rate of 20%.
(3) In the case of income from the transfer of tax-deferred stocks, the par value of the stocks shall be deemed as the taxable income of the year of transfer. 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 distribution of the estate is lower than the par value, the actual transfer price or the market value shall be deemed the taxable income. Such income shall be filed and taxed at the rate of 18% or 21% in accordance with the different category of income.
(4) Miscellaneous income shall be filed and taxed at the rate of 20%.
(5) Where a trust deed is set up by a profit-seeking enterprise, the beneficiary shall be taxed at the rate of 20% on the value of his/her entitlement to the trust in the year of establishment, and a newly replaced beneficiary shall be taxed in the year of replacement. Furthermore, the beneficiaries shall be taxed at the rate of 20% on the increased part of the value of their entitlements when the enterprise makes the addition of an increment to the trust fund.
(6) For non-R.O.C. residents who stay in the R.O.C. over 90 days within a taxable year, remunerations paid by employers outside the R.O.C. for services rendered in the R.O.C. shall be filed and taxed at the rate of 18%

 

17. Tax credit for selling a residence and repurchasing another one within two years

If a house or other property resided in by the taxpayer (hereafter called “former residence”) is sold by him/her and the gain from the sale is consolidated and taxed; and within a period of two years after the date of public registration of such sale, another house or other property is purchased and used as an owner-occupied residence at a price exceeding the selling price of the former residence, the taxpayer may claim a credit or a refund of the aforesaid income tax for the year in which public registration of such a purchase is completed. This provision shall also be applicable in the case where a taxpayer buys first and sells later.

18. Investment tax credit

(1) Taxpayers who invested in newly emerging, important, or strategic industries under Article 8 of the Statute for Upgrading Industries before its abolishment may credit up to a designated percentage of the price paid for the acquisition of the registered share certificates of the said enterprises or entities against the individual income tax payable within five years starting from the year in which the three-year holding requirement is met.

(2) Taxpayers who invested in designated entities under Article 33 of the Statute for Encouragement of Private Participation in Transportation Infrastructure Projects may credit up to 20% of the price paid for the acquisition of the registered share certificates of the said entities against the individual income tax payable within five years starting from the year in which the two-year holding requirement is met.

 (3)  The credit in each year shall be limited to not more than 50% of individual income tax payable, with the exception that this limitation shall not apply to the credit in the final year.

19. The ways a resident shareholder is to file for tax on dividends or profits of the year 1998 or after

(1)When a company (or a cooperative) makes distribution on dividends or profits of the year 1998 or of the following years to its resident shareholder, the company should prepare a “Dividend Statement” for him/her to file his/her tax return. The resident could choose to incorporate the total amount of dividends and earnings into consolidated income to calculate the tax based on progressive income tax rates, and the tax payable may be offset by a tax credit of 8.5% of the total amount of the dividends and earnings (the credit ceiling set at NT$80,000 per year per income tax return).

The resident could opt to calculate the tax payable separately in accordance with the single tax rate of 28% on the total amount of the dividends and earnings. Such tax payable shall be aggregated to the consolidated income tax return, and computed the tax balance due (refund) amount.

(2) When the above-mentioned dividends or profits are being distributed to its non-resident shareholder, the company should issue him/her a “Withholding & Non-Withholding Tax Statement.” If the non-resident shareholder continues to stay in the R.O.C. for 183 days or more in the same taxable year, he/she (on thus attaining the status of resident) shall ask the company to amend the “Withholding & Non-Withholding Tax Statement” to a “Dividend Statement” for the filing of the tax return.

20. Paying taxes and obtaining tax refunds

(1) Ways of paying taxes:

Taxpayers can make payments at any local bank with a self-payment bill which is filled out by himself/herself or with a payment bill which is issued by the tax authority after assessment. Payment may also be made in cash at convenience stores if the tax due is NT$30,000 or under, or be made online at https://paytax.nat.gov.tw via a card reader with a Financial Chip Card. In addition, to encourage e-Filing, taxpayers who file their taxes on line are entitled to pay taxes by their or their spouses' (Taiwanese spouses also apply) credit cards (issued by domestic financial institutions which have signed up for this credit card service only).

(2) Ways of obtaining refunds:

If the tax-withholding amount exceeds the tax payable, the overpaid amount will be refunded according to general procedures. Aside from refund checks, tax refunds may also be transferred directly into an existing NT-dollar bank (post office) account belonging to the taxpayer, spouse, or dependents filing jointly.

21. Guarantee of filing and payment of individual income tax

(1) Guarantee for the filing in the year the alien leaves the R.O.C.:

An alien who intends to leave the territory of the R.O.C. and is not able to file his/her individual income tax return before leaving the R.O.C. shall appoint a Taiwanese citizen of qualified financial capacity to be the guarantor and fill out an “Agent Appointment and Acceptance” form before his/her departure. The agent shall be responsible for filing the alien’s tax return and paying tax in accordance with the provisions of the Income Tax Acts.

(2) Guarantee for filing income in regard to securities investments:

In accordance with Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals, a foreign national investing in securities markets shall fill out an “Agent Appointment and Acceptance Form” for appointing a Taiwanese citizen with qualified financial capacity to be the agent obliged to file tax returns and pay taxes in connection with the securities investments in the R.O.C. The agent shall be responsible for submitting either the official guarantee approval or the individual income tax certificate issued by the National Taxation Bureau to the authorities when applying for exchange settlement of securities investment earnings.

22. Tax certification

(1) An alien shall obtain an income tax certificate from this Bureau before his/her departure or upon application for his/her exit permit or for a visa extension of stay.

(2) When an alien seeks to have the tax payment of Taiwan credited against the income tax which he/she is obliged to pay in accordance with the laws of his/her nationality, an official tax certificate of the R.O.C. is available upon request.

23. Penalties

(1) Late filing: Taxpayers shall be surcharged interest on the amount of tax payable. The interest shall be calculated on a daily basis at the interest rate quoted for postal savings for a one-year fixed deposit.

(2) Omission or misfiling: A fine of a maximum of twice the amount of the tax evaded.

(3) Failure to file: A fine of a maximum of three times the amount of the tax payable.

※ In the case where tax due of the taxpayer is additionally found by the tax authority within the assessment period, the taxpayer shall still be subject to payment of the tax owed and/or any penalty in accordance with the relevant regulations.