Taiwan – Taxation of international executives

Taxation of international executives.

Taxation of international executives.

  

Overview and Introduction

Personal income tax is levied on the source principles.  Generally, only income derived from activities or work carried out in Taiwan, or other income from sources in Taiwan, is subject to tax. Nevertheless, if a resident’s non-Taiwan sourced income exceeds TWD1,000,000, such income is subject to Basic Tax generally referred as Alternative Minimum Tax (AMT).

A resident’s net taxable income is taxed at progressive rates ranging from 5 percent to 40 percent. For non-resident aliens, the tax rate is fixed at 18 percent on gross salary income and 20 percent on other income.

The official currency of Taiwan is the Taiwan Dollar (TWD).

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Income Tax

Tax returns and compliance

When are tax returns due? That is, what is the tax return due date?

31 May and extension of the filing deadline is generally not allowed.

However, if the taxpayer permanently leaves Taiwan during the year, the taxpayer is required to file final tax return before departure.

What is the tax year-end?

31 December.

What are the compliance requirements for tax returns in Taiwan?

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

1. Non-Residents

A. For an individual who stays in Taiwan for no more than 90 days within a taxable year (January 1st to December 31st), the income derived from sources in Taiwan shall be withheld according to the withholding rate 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.

B. For an individual who stays in Taiwan 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 on his/her income derived from sources in Taiwan, including the remunerations received from abroad for his/her services rendered in Taiwan.

2. Residents

An individual who stays in Taiwan for 183 days or longer within a taxable year is regarded as a resident. Such individual’s remunerations received from onshore and abroad for services rendered in Taiwan and other types of incomes sourced from Taiwan shall be declared and calculated based on a progressive rate.  His/her net consolidated income (taxable income) shall be the annual gross consolidated

There are severe penalties for omission and failure to file a return.

In the case where the taxpayer is found by the tax authority for failure of filing the tax return and paying the tax due in accordance with the rules, the taxpayer is subject to a fine up to three time of underpaid tax.  The tax authority can inform the immigration authority to disapprove the taxpayer’s departure from Taiwan.  However, if the taxpayer files his/her tax return and pays tax due before the tax authority finds out such non-compliance, except for interest on the amount of tax due, the penalty would be exempted.

Penalty provisions

Situation

Penalty

Failure to pay tax due by 31 May

Interest is charged on any tax due and delinquent surcharge is imposed after 31 May.

Tax return not submitted at all

The penalty up to three times of the tax due may be imposed.

Failure to report income

The penalty up to two times of the tax due may be imposed.

Failure to pay income tax due

Generally, this situation does not arise since the tax office will only accept a fully paid tax return.

Incorrect or fraudulent return

The earlier mentioned penalty may be imposed depending on the actual circumstances.


Statute of limitations

For taxpayers who have filed in accordance with the income tax law, the statute of limitations is 5 years. For taxpayers who fail to file in accordance with the income tax law, the statute of limitations is 7 years.

Residents

The tax compliance rules are same for residents and non-residents.

Non-residents

The tax compliance rules are same for residents and non-residents.

Tax rates

What are the current income tax rates for residents and non-residents in Taiwan?

Residents

Residents pay the greater of Regular Income Tax or the Basic Tax.

Income tax table for 2021 , in New Taiwan dollar (TWD)

Taxable income bracket

Total tax on income below bracket

Tax rate on income in bracket

From TWD

To TWD

TWD

Percent

0

540,000

0

5

540,001

1,210,000

27,000

12

1,210,001

2,420,000

107,400

20

2,420,001

4,530,000

349,400

30

4,530,001

Above

982,400

40


Basic Tax is taxed at a rate of 20% on the netting amount of Basic Income amount deducting exemption amount TWD6,700,000.  Basic Income Amount includes Regular Net Taxable income amount as prescribed in the Income Tax Act and the following add-back items:

  • Overseas income (if overseas income is over TWD1,000,000)
  • Gain from the sale of Taiwan unlisted company’s shares (starting from January 1, 2021)
  • Other items (e.g. income derived from transactions of beneficiary certificates of privately-placed securities investment trust funds in Taiwan)

Non-residents

For non-resident aliens, the tax rate is 18 percent on gross salary income starts from 2010, and tax rate is 20 percent on other income.

Additionally, from 1 January 2018, withholding tax on dividend income for non-residents is increased from 20 percent to 21 percent.

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Taiwan?

For tax purposes, an individual is considered a resident of Taiwan if they meet either of the following criteria:

  • they are domiciled in Taiwan and resides there at all times
  • they are not domiciled in Taiwan but has stayed in Taiwan for 183 days or more during a taxable year.

The individual is considered a non-resident if they do not satisfy either of the previous mentioned criteria.

Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country/jurisdiction for more than 10 days after their assignment is over and they repatriate.

No, the resident test will be determined by the total number of days the foreigner stays in Taiwan in a calendar year.

What if the assignee enters the country/jurisdiction before their assignment begins?

The days will be counted as if they physically stay in Taiwan even before their assignment begins.

Termination of residence

Are there any tax compliance requirements when leaving Taiwan?

Individual residents should file their returns for the current year before leaving Taiwan permanently.

What if the assignee comes back for a trip after residency has terminated?

The days will be counted as if they physically stay in Taiwan even after residency has terminated.

Communication between immigration and taxation authorities

Do the immigration authorities in Taiwan provide information to the local taxation authorities regarding when a person enters or leaves Taiwan?

The local taxation authority can directly link to the immigration authority to review such information.

Filing requirements

Will an assignee have a filing requirement in the host country/jurisdiction after they leave the country/jurisdiction and repatriate?

It is possible, if they have Taiwan-sourced income to report. For example, if the assignee exercises the stock option after they depart from Taiwan, but they worked in Taiwan from the grant date to the vesting date, they will have Taiwan-sourced income in the year of exercise.

Economic employer approach

Do the taxation authorities in Taiwan adopt the economic employer approach to interpreting Article 15 of the Organisation for Economic Co-operation and Development (OECD) treaty? If no, are the taxation authorities in Taiwan considering the adoption of this interpretation of economic employer in the future?

Information is not available.

De minimus number of days

Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?

Information is not available.

Types of taxable compensation

What categories are subject to income tax in general situations?

In general, all remuneration and benefits received by an employee for services rendered in Taiwan are considered taxable income, regardless of where such payments are made. This applies only to those who have remained in Taiwan for longer than 90 days in a tax year.

Types of compensation included as taxable income are as follows:

  • base salary and bonus
  • cost-of-living allowance
  • if employees are reimbursed for car expenses incurred on company business, this is not considered taxable income unless compensation exceeds equivalent taxi or ticket prices of trains and buses
  • home leave for expatriates is deemed not taxable if supported by appropriate invoices and contracted for in the employment agreement
    • However, home leave expenses for other family members paid by the employer are taxable.
  • expatriation premium
  • education for dependent children
  • the employee’s portion of pension contributions made by the employer on behalf of the employee is taxable
  • relocation allowance
  • group life insurance payments exceeding TWD2,000 per month made by the employer on behalf of the employee are considered taxable income
    • However, the employer’s portion of contribution to Labor Insurance and National Health Insurance is not taxable.
  • taxes paid on behalf of an employee by the employer are considered taxable income.

Yes, if the directors have physically presented in Taiwan.

Intra-group statutory directors

Will a non-resident of Taiwan who, as part of their employment within a group company, is also appointed as a statutory director (i.e. member of the Board of Directors in a group company situated in Taiwan) trigger a personal tax liability in Taiwan, even though no separate director's fee/remuneration is paid for their duties as a board member?

Whether the director would trigger Taiwan individual tax will depend on if he/she has physically presented in Taiwan.

a) Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Taiwan?

If the board member is physically present at the board meetings in Taiwan, he/she may trigger Taiwan individual income tax depend on the days stays in Taiwan and if the relevant costs are charged to Taiwan entity.

b) Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Taiwan (i.e. as a general management fee where the duties rendered as a board member is included)?

No, as whether Board member may trigger Taiwan individual income tax if he/she is physically present and receive remuneration in Taiwan.

c) In the case that a tax liability is triggered, how will the taxable income be determined?

In general, taxable income will be determined based on board member’s remuneration received in Taiwan.

Tax-exempt income

Are there any areas of income that are exempt from taxation in Taiwan? If so, please provide a general definition of these areas.

The following items are exempt from individual income tax.

  • Salary paid by a foreign government to foreign technicians and professors for services rendered in Taiwan under an agreement between the governments.
  • A meal allowance of up to TWD2,400 per month is exempt from individual income tax.
  • Overtime pay of up to 46 hours on weekdays per month is exempt from tax and in excess of this level is considered taxable income.
  • A daily allowance for food, lodging, and living expenses received by alien technicians or professionals hired by a Taiwanese government agency or a private enterprise to provide service in Taiwan and stay for not more than 90 days shall be exempt from tax up to TWD2,000 per day upon the approval of the Ministry of Economic Affairs.
  • Removal expenses paid for by the employer for the shipping of an employee’s household goods for the period of assignment are tax-exempt. In addition, the national tax administration under the Ministry of Finance in all districts is responsible for the identification and review of the relevant documents of foreign professionals applying for tax preferences in accordance with the Scope of Application for Tax Preferences Provided to Foreign Professionals.
  • If the employer provides housing for the employee, rather than pay a cash allowance or reimbursement, the value of the benefit may be wholly excluded from taxation. In addition, the national tax administration under the Ministry of Finance in all districts is responsible for the identification and review of the relevant documents of foreign professionals applying for tax preferences in accordance with the Scope of Application for Tax Preferences Provided to Foreign Professionals.

Expatriate concessions

Are there any concessions made for expatriates in Taiwan?

Effected on February 8 2018, in accordance with Article 9 of the Act for the Recruitment and Employment of Foreign Professionals, where a foreign special professional engages in professional work and meets specified conditions, does not have household registration within Taiwan and has for the first time been approved to reside in Taiwan for the purpose special skilled of work, or has obtained an Employment Gold Card (EGC)* under the provisions of the previous Article, and during the period of validity of the Employment Gold Card* is employed to conduct professional work, then within 3 years (likely to change to 5 years soon) starting from the tax year in which said person for the first time meets the conditions of residing in the State for a full 183 days of the year and having salary income of more than TWD3 million, the part of said person’s salary income above TWD3 million in each such tax year in which said person resides in Taiwan for fully 183 days shall be halved in amount in the computation of total income for the assessment of individual income tax liability in that year.

*An approval from the National Immigration Agency, Ministry of the Interior.

Salary earned from working abroad

Is salary earned from working abroad taxed in Taiwan? If so, how?

For the foreigner, if their income is paid and borne by the offshore company and they stay in Taiwan for less than 90 days in a taxable year, the income earned from working abroad is not taxed in Taiwan. However, if their income is paid or borne by the Taiwan Company, such income is taxed in Taiwan though it is earned from working abroad.

If the foreigner stays in Taiwan for longer than 90 days in a taxable year, the compensation in relation to his or her services performed while in Taiwan is generally taxed in Taiwan.  

Taxation of investment income and capital gains

Are investment income and capital gains taxed in Taiwan? If so, how?

As for taxation of Interest, Dividend and Rental income, please refer below Section.

The new capital gain tax applied to (1) buildings and land acquired after 1 January 2016, or (2) buildings and land acquired after 2 January 2014 but being held for less than 2 years. The new capital gain tax is payable within 30 days from the following date the ownership registration is completed.  In addition, effective on July 1, 2021, the below new capital tax rates apply on the sale of building and land:

Holding Period

Resident

Non-resident

Period =< 2 years

45%

45%

2 years< Period <= 5 years

35%

35%

5 years <Period <= 10 years

20%

35%

10 years <Period

15%

35%

Starting from January 1, 2021, the gain from the sale of Taiwan unlisted company’s shares is subject to the Basic Tax.

Dividends, interest, and rental income

  • Interest

For each year, the first TWD270,000 of interest earned from financial institutions (sourced in Taiwan) is excluded from a resident individual’s taxable income and in excess of TWD270,000 is considered taxable income. In addition, interest on short-term bills (subject to 10 percent withholding for resident and 15 percent for non-resident) and tax-free postal passbook savings accounts is not included in while calculating the above tax exempted interest TWD270,000

  • Dividend

Normally, cash and stock dividends distributed from the local company are taxable.

From 1 January 2019 onwards, surtax on undistributed earnings can no longer be credited against dividend withholding tax. In addition, from 1 January 2018, withholding tax on dividend income for non-residents is increased from 20 percent to 21 percent.

  • Rental income

Rental and royalty income is taxed net of certain necessary expenses. A standard percentage is allowed as a deduction from rental income if preferred. The current deduction is 43 percent of the gross rental income.

Gains from stock option exercises

Residency status

Taxable at:

 

Grant

Vest

Exercise

Resident

N

N

Y

Non-resident

N

N

Y

 

Foreign exchange gains and losses

Foreign Exchange Gains and Losses derived within Taiwan are normally taxable.

Principal residence gains and losses

The new capital gain tax applied to (1) buildings and land acquired after 1 January 2016, or (2) buildings and land acquired after 2 January 2014 but being held for less than 2 years. The new capital gain tax is payable within 30 days from the following date the ownership registration is completed. 

Effective on July 1, 2021, the below new capital tax rates apply on the sale of building and land:

Holding Time

Resident

Non-resident

Time =< 2 years

45%

45%

2 years< Time <= 5 years

35%

35%

5 years <Time <= 10 years

20%

35%

10 years <Time

15%

35%

If the resident holds the principle residence over 6 years and meets the qualifications under the Act, the capital gain TWD4,000,000 is tax exempted and the excess over TWD4,000,000 is taxed at 10%.

Capital losses

Basically, the capital loss can offset the capital gain of the same capital type. The remaining capital loss, if any, cannot offset the other capital gain or income.

Personal use items

Generally, the gain from selling personal clothes, furniture is not taxable.

Gifts

Gifts (cash and non-cash) from employers are general taxable benefits-in-kind.

Additional capital gains tax (CGT) issues and exceptions

Are there additional capital gains tax (CGT) issues in Taiwan? If so, please discuss?

There is no capital gains tax on selling stocks in Taiwan effective on 1 January 2016. However, the gain from the sale of Taiwan unlisted company’s shares is subject to the Basic Tax starting from January 1, 2021.

As for capital gain tax on sales of land and buildings, please refer to Section Taxation of Investment Income and Capital Gains.

Are there capital gains tax exceptions in Taiwan? If so, please discuss? Pre-CGT assets

There is no capital gains tax on selling stocks in Taiwan effective on 1 January 2016. However, the gain from the sale of Taiwan unlisted company’s shares is subject to the Basic Tax starting from January 1, 2021.

Deemed disposal and acquisition

No particular issues. The general tax principle applies.

General deductions from income

What are the general deductions from income allowed in Taiwan?    

For 2021 the personal exemption allowed for an individual, their spouse and each qualified dependent is TWD88,000. For a lineal ascendant who is at least 70 years old, the personal exemption is TWD132,000.

The taxpayer is entitled to claim the greater of itemized deductions or standard deduction, currently TWD120,000 for a single taxpayer and TWD240,000 for a married taxpayer.

Specific itemized deductions include the following items:

  • Charitable contributions to educational, cultural, charitable, or public welfare organizations are allowable to the extent of 20 percent of the individual’s gross income before this deduction. Donations made to national defense or the government is not subject to this 20 percent restriction.
  • Insurance premiums paid for life or labor insurance by the taxpayer on behalf of themselves, their spouse, or lineal relatives may be deducted to the extent of TWD24,000 per person.
  • Insurance premium paid for National Health Insurance Program.
  • Medical and childbirth expenses incurred by the individual or their spouse and paid to a public hospital, an approved private hospital, or clinic shall be deductible insofar as they are not compensated by insurance.
  • Losses caused by natural disasters are deductible when not otherwise covered by insurance or other benefits and applying for an investigation and appraisal of losses within 15 days after the disaster’s occurrence.
  • Mortgage interest incurred and paid by the individual to a financial institution for a loan to purchase a self-use residential dwelling shall be deductible up to TWD300,000 per income tax return. The interest deductible is reduced by the amount of the exemptions for interest income.
  • Rental payment incurred and paid by the individual within a tax year is deductible up to TWD120,000 per income tax return. The rental residence must be solely for personal residing purposes, not business related.

In addition, the taxpayer may claim the following special deductions:

  • (1) Special deduction for wage - Each salary or wage earner can deduct up to TWD200,000 of their salary or wage income from their taxable income.  However, it is not applicable to the taxpayer who claims the itemized wage deduction.
  • (2) Special deduction for saving and investments - TWD270,000 of interest earned from financial institutions (sourced in Taiwan) can be deducted from a resident individual’s taxable income.
  • (3) Special deduction for disability - A TWD200,000 disability deduction is allowed for each taxpayer, spouse, and dependent who is a mental patient or a disabled person.
  • (4) Special deduction for tuition - A taxpayer may claim a maximum college deduction of TWD25,000 per each dependent child if their child/children are attending colleges/universities without subsidies or scholarships.
  • (5) 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)
  • (6) Special deduction for long term care – the taxpayer, his/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, may 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)
  • (7) 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.

Notes: 
 
1. After deducting the pre-school deduction and long-term care deduction, the tax rate is equal or greater than 20% or

2. The taxpayer elects the dividend income separately taxed at a fixed tax rate of 28%.

3. The amount of the basic income of the taxpayer is greater than NT$6,700,000.

Basic Living Expense Difference: The total basic living expense shall be calculated in accordance with the expense of basic living for each person, NT$182,000 announced by the Central Authority for 2020, multiplied by the number of persons in one tax return. If the amount of basic living expense is higher than the sum of exemptions, standard deduction (or itemized deduction) and the above special deduction (2)(3)(4)(5)(6) , the difference can be used as an additional deduction from the gross consolidated income.

Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in Taiwan?

The actual tax reimbursement method is generally used.

Calculation of estimates/prepayments/withholding

How are estimates/prepayments/withholding of tax handled in Taiwan? For example, Pay-As- You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.

For a taxpayer receiving salaried income, the employer must withhold tax payable at the time of payment (by the Taiwan entity) as per the prescribed tax rates and withholding procedures, and report and pay the tax withheld in accordance with the provisions of the income tax law.

Pay-as-you-go (PAYG) withholding

The Taiwan employer must withhold tax payable at the time of payment.

PAYG installments

No installments arrangement.

Relief for foreign taxes

Is there any Relief for Foreign Taxes in Taiwan? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?

Under the regular tax, there is no relief for foreign taxes allowed for foreign expatriates. However, if the resident pays alternative minimum tax due to the inclusion of their offshore income, they may claim the foreign tax credit given that the supporting documents are submitted.

General tax credits

1What are the general tax credits that may be claimed in Taiwan? Please list below.

The general tax credits include investment tax credit and home re-purchase tax credit.

Sample tax calculation

This calculation assumes a married taxpayer resident in Taiwan with two children whose 3-year assignment begins 1 January 2019 and ends 31 December 2021.3 The taxpayer’s base salary is 100,000 US dollars (USD) and the calculation covers 3 years.

 

2019

USD

2020

USD

2021

USD

Salary

100,000

100,000

100,000

Bonus

20,000

20,000

20,000

Cost-of-living allowance

10,000

10,000

10,000

Net housing allowance

12,000

12,000

12,000

Company car

6,000

6,000

6,000

Moving expense reimbursement

20,000

0

20,000

Home leave

0

5,000

0

Education allowance

3,000

3,000

3,000

Interest income from non-local sources

6,000

6,000

6,000

Exchange rate used for calculation: USD1.00 = TWD30.

Other assumptions

  • All earned income is attributable to Taiwan sources.
  • Bonuses are paid at the end of each tax year and accrue evenly throughout the year.
  • Interest income is not remitted to Taiwan.
  • The company car is used for business and private purposes and originally cost USD50,000.
  • The employee is deemed resident throughout the assignment.
  • Tax treaties and totalization agreements are ignored for the purpose of this calculation.

Calculation of taxable income

Year-ended

2019

TWD

2020

TWD

2021

TWD

Days in Taiwan during year

365

366

365

Earned income subject to income tax

 

 

 

Salary

3,000,000

3,000,000

3,000,000

Bonus

600,000

600,000

600,000

Cost-of-living allowance

300,000

300,000

300,000

Net housing allowance

360,000

360,000

360,000

Company car

0

0

0

Moving expense reimbursement

0

0

0

Home leave

0

112,500

0

Education allowance

90,000

90,000

90,000

Total earned income

4,350,000

4,462,500

4,350,000

Other income

0

0

0

Total income

4,350,000

4,462,500

4,350,000

Deductions

792,000

792,000

792,000

Basic Living Expense Difference

108,000

136,000

136,000

Total taxable income

3,450,000

3,534,500

 

3,422,000

 


Calculation of tax liability

 

2019

TWD

2020

TWD

2021

TWD

Taxable income as above

3,450,000  

3,534,500

 

3,422,000

 

Taiwanese tax thereon

658,400

 

683,750

 

650,000

 

Less:

 

 

 

Domestic tax rebates (dependent spouse rebate)

0

0

0

Foreign tax credits

0

0

0

Total Taiwanese tax

658,400

 

683,750

 

650,000

 


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Footnotes

Certain tax authorities adopt an "economic employer" approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee is assigned to work for an entity in the host country/jurisdiction for a period of less than 183 days in the fiscal year (or a calendar year of a 12-month period), the employee remains employed by the home country/jurisdiction employer but the employee’s salary and costs are recharged to the host entity, then the host country/jurisdiction tax authority will treat the host entity as being the "economic employer" and therefore the employer for the purposes of interpreting Article 15. In this case, Article 15 relief would be denied, and the employee would be subject to tax in the host country/jurisdiction.

For example, an employee can be physically present in the country/jurisdiction for up to 60 days before the tax authorities will apply the ‘economic employer’ approach.

Sample calculation generated by KPMG in Taiwan, the Taiwan member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the Taiwan Income Tax Law (as revised on 28 April  2021).

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Special considerations for short-term assignments

Residency rules

Payroll considerations

Taxable income

Additional considerations

For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year.

Residency rules

Are there special residency considerations for short-term assignments?

If the foreigner stays in Taiwan for 90 days or less in a calendar year and their income is paid and borne by the foreign employer, their employment income is not taxed in Taiwan.

Payroll considerations

Are there special payroll considerations for short-term assignments?

The foreigner should have a valid work permit before receiving the employment income from the Taiwanese company.

Taxable income

What income will be taxed during short-term assignments?

Basically, all Taiwan-sourced income is taxed in Taiwan. However, if the foreigner stays in Taiwan for 90 days or less in a calendar year and their income is paid and borne by the foreign company, their employment income is not taxed in Taiwan.

Additional considerations

Are there any additional considerations that should be considered before initiating a short- term assignment in Taiwan?

No.

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Other taxes and levies

Social security tax

Are there social security/social insurance taxes in Taiwan? If so, what are the rates for employers and employees?

Employer and employee

National health insurance rate currently is 5.17 percent of insurable amount and the maximum insurable amount is TWD182,000/month. The insurance premium will increase if there is additional family member. For the following table, we assume that the employee is single.

Labor insurance rate currently is 10.5 percent of insurable amount and the maximum insurable amount is TWD45,800/month. The employer and employee contribution rates for national health insurance and labor insurance are listed as below:

Type of insurance

Paid by employer

Paid by employee

Paid by government

Total

National health insurance

4.9%

1.551%

0.517%

6.968%

Labor insurance

7.35%

2.1%

1.05%

10.5%

Total

12.25%

3.651%

1.567%

17.468%

Gift, wealth, estate, and/or inheritance tax

Are there any gift, wealth, estate, and/or inheritance taxes in Taiwan?

Are there any gift, wealth, estate, and/or inheritance taxes in Taiwan?

Gift tax is based on all property transferred annually and includes:

1. Gift made by a person who is a Taiwanese citizen and regularly resides in Taiwan, irrespective of whether the property gifted is located within or outside of Taiwan.

2. Gift made by a person who is a Taiwanese citizen but reside outside Taiwan regularly, or who is not a Taiwanese citizen, only if the property given is located within Taiwan.

Generally, the taxpayer is the donor.  

Estate tax is based on all property transferred at death.  The scope of estate tax covers the following:

1. Property left by the deceased who was a Taiwanese citizen and regularly resided in Taiwan, irrespectively of whether the location of the property is within or outside Taiwan.

2. Property left by the deceased who was a Taiwanese citizen but resided outside Taiwan regularly, or who was not a Taiwanese citizen, only when the property is located within Taiwan.

The total estate is valued according to the prescribed property value prevailing at the time of death.

Real estate tax

Are there real estate taxes in Taiwan?

Yes, Land value tax is levied on a taxpayer’s total land value assessed and publicly announced by the relevant local government authority at progressive rates ranging from 1% to 5.5%, or at special rates depending on the use of the land. Besides, the transfer of land in Taiwan is subject to Land Value Incremental Tax. 

A House tax is imposed on all buildings in Taiwan at varying rates, depending on their classification.  It is levied annually on the assessed value of the building at a rate ranging from 1.2% to 3.6% for residential buildings and 3% to 5% for commercial buildings.

Sales/VAT tax

Are there sales and/or value-added taxes in Taiwan?

Yes. In general, a 5 percent value-added tax will be imposed on goods and services sold or provided in Taiwan and goods imported into Taiwan.

Unemployment tax

Are there unemployment taxes in Taiwan?

There is no unemployment tax in Taiwan.

Other taxes

Are there additional taxes in Taiwan that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.

No.

Land tax

If the assignee owns the land, they need to pay Land value tax annually (see above real estate tax).

Payroll tax

No, there is no payroll tax.

Foreign Financial Assets

Is there a requirement to declare/report offshore assets (e.g. foreign financial accounts, securities) to the country/jurisdiction’s fiscal or banking authorities?

There is no such requirement.

  

Immigration

Following is an overview of the concept of Taiwan’s immigration system for skilled labor.

(E.g. which steps are required, authorities involved, in-country/territory and foreign consular processes, review/draft flow chart illustrating the process)

The relevant procedures are listed out as below:

1. Apply to the Council of Labor Affairs  to obtain the work permit (Note): approx. 12 working days

2. Apply to the National Immigration Agency for issuance of the Alien Resident Certificate and re-entry permit. (*a foreigner shall apply for a visitor visa (*the stay duration shall have at least 60 days and it cannot be remarked "no extension will be granted" or “it is not allowed to be converted to resident status”) to enter into Taiwan.): approx. 10 working days.

*if the foreign staff and family members enter into Taiwan with visa-exempt entry, s/he shall apply for visa conversion (from visa-exempt entry to visitor visa, approx. 5 working days) in Taiwan before applying for the ARC.

Note: There are two kinds of applications for obtaining the work permit in Taiwan:

The foreign national is employed by the local company directly.

The employer and foreign employee shall comply with relevant requirements to apply for the work permit. The applicant will be the employer.

The foreign national is dispatched to Taiwan to perform the service contract between the foreign company and a local company.

The applicant will be the local company or an authorized person.

  • In case the working period is less than 30 days, the foreign national’s entry visa can be deemed as the work permit. No work permit is needed to be applied.
  • In case the working period is 30-90 days, the work permit is required to be applied. However, the government authority will not review the foreign national’s education/work experience background.
  • In case the working period is more than 90 days, the work permit is required to be applied. The foreign national shall comply with relevant requirements related to education/work experience background to apply for the work permit.

International Business Travel/Short-Term Assignments

Describe (a) which nationalities may enter Taiwan as non-visa national, (b) which activities they may perform and (c) the maximum length of stay.

The non-visas types, the maximum length of stay and eligible countries are outlined as below:

1. Visa-exempt entry:

  • A duration of stay of up to 90 days:

Andorra, Australia (effective till December 31, 2021), Austria, Belgium, Bulgaria, Canada, Chile, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Eswatini, Finland, France, Germany, Greece, Guatemala, Haiti, Honduras, Hungary, Iceland, Ireland, Israel, Italy, Japan, Republic of Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Marshall Island, Monaco, Netherlands, New Zealand, Nicaragua, North Macedonia (effective till March 31, 2025), Norway, Palau, Paraguay, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, Tuvalu, the United Kingdom, the United States of America, and Vatican City State.

Note: Canadian and UK passport holders are eligible for the visa exemption program with a duration of stay of 90 days which is extendable up to 180 days.

  • A duration of stay of up to 30 days

Belize, Dominican Republic, Malaysia, Nauru, St. Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Singapore.

  • A duration of stay of up to 21 days.

Russia (effective till July 31, 2021)

  • A duration of stay of up to 14 days

Thailand (effective till July 31, 2021), Brunei (effective till July 31, 2021), Philippines (effective till July 31, 2021)

2. Landing visa:

Eligible countries:

  • Holders of Turkish passport with validity of more than six months.
  • Holders of emergency or temporary passports with validity of more than six months for nationals of those countries (except for US) eligible for visa-exempt entry.

Duration of stay:

1. The 30-day duration of stay starts from the next day of arrival and is not extendable.

2. The above-said landing visa cannot be converted to visitor or resident visa under normal circumstances.

In general, the visa just allows a foreigner to enter and stay in Taiwan. However, in case s/he will work in Taiwan, s/he shall obtain work permit before starting to work. In addition, in case a foreigner obtains the work permit validated over 6 months, s/he can use such work permit to obtain Alien Resident Certificate in Taiwan.

Describe (a) the regulatory framework for business traveler being visa nationals (especially the applicable visa type), (b) which activities they may perform under this visa type and the (c) maximum length of stay.

The visas types, the maximum length of stay and eligible countries are outlined as below. In addition, below visas need to be applied in an R.O.C. (Taiwan) overseas mission before foreign nationals arriving Taiwan:

1. Visitor visa:

  • Eligible Persons: foreign nationals who intend to stay in Taiwan for no more than six months for the purposes  of transit; tour; visit relatives; undertake visits; undertake inspection tours; attend international conferences; conduct business; pursue short-term study; undertake short-term employment; undertake short-term missionary work; and engage in other activities in the ROC as approved by MOFA.
  • Duration of stay: 14, 30, 60 or 90 days (Visitor Visa holders who are permitted to stay in Taiwan for sixty or ninety  days and whose visas bear no such remark as "no extension will be granted" may apply at local service centers of  the National Immigration Agency  for a maximum of 120 or 90 days of extensions.)

2. Resident visa

  • Eligible Persons: foreign nationals, who hold ordinary passports or other legal travel documents, who intend to stay in the Republic of China for more than six months for the purpose of join family; pursed studies; undertake employment; invest; conduct missionary work; conduct official duties; participate in international exchange programs; and engage in other activities approved by MOFA or other relevant agencies at the central-government level.
  • Duration of stay: Resident Visa holders are required to apply for the Alien Resident Certificate and Re-entry Permit at local service centers of the National Immigration Agency within 15 days starting from the next day of their arrival. They may stay in the ROC (Taiwan) as long as the Alien Resident Certificate remains valid.

Note: If foreign nationals who have entered into ROC (Taiwan) with Visitor Visas are subsequently legally employed in the ROC (Taiwan), they may make the necessary change from their Visitor Visa into a Resident Visa in the ROC (Taiwan) directly. 
The above regulations do not apply to blue collar workers or those who enter the ROC (Taiwan) via the visa exemption program or landing visa.

Outline the process for obtaining the visa type(s) named above and describe (a) the required documents (including any legalization or translation requirements), (b) process steps, (c) processing time and (d) location of application.

Foreign nationals shall obtain below visas from an ROC (Taiwan) overseas mission and the processing time will be decided by the ROC. (Taiwan) overseas mission case by case:

1. Visitor visa for employment purpose

Requirement:

  • Completed & signed application form;
  • Two passport-size photos in color within 6 months: Photos with a white color background;
  • Passport (original & photocopy): Valid for 6 months with blank pages;
  • Approval Letter issued by Ministry of Labor, Taiwan;
  • Other additional documents may be required during processing: ticket, electronic ticket or proof of a travel agency.

Procedures:

  • Applicants can lodge their applications with the necessary documents and statutory fee at our overseas missions.
  • Interview may be required when necessary.

2. Resident Visas for White Collar Workers

Requirement:

  • Application form;
  • Two color passport-size photos: paste on the application form two color passport-size photos with a white background taken within 6 months;
  • Passport and one photocopy of the passport: the passport must be valid for at least 6 months and there are blank pages left in it.  One photocopy of the passport bio-page including the holder’s picture is required;
  • Original and one photocopy of work permit issued by competent authorities of central government of the R.O.C. (Taiwan): remaining period of employment indicated on the work permit must be more than 6 months at the time of Resident Visa application;
  • Other supporting documents: to be decided on a case-by-case basis.  Applicants who apply for a Resident Visa after having arrived in the R.O.C. (Taiwan) are required to present also one photocopy of the Visitor Visa and the immigration entry stamp.

Procedures:

  • Applicants outside of the R.O.C. (Taiwan) are advised to apply for the visa from an R.O.C. (Taiwan) overseas mission.
  • Applicants who enter the R.O.C. (Taiwan) on a non-extendable Visitor Visa for the purposes of employment, investment, business or tourism may apply for a Resident Visa 8 work days before the duration of stay expires.  The applicants may apply, without having to leave Taiwan, to the Bureau of Consular Affairs or any of its Central, Southwestern, Southern, or Eastern Taiwan Offices.

Note:

  • Those who enter the R.O.C. (Taiwan) on a Resident Visa or get a Resident Visa after  having arrived in the R.O.C. (Taiwan) must apply for an Alien Resident Certificate and Re-entry Permit at local service centers of National Immigration Agency. The former must apply within 15 days from the next day of arrival, and the latter must apply within 15 days from the Resident Visa issuance date.  Duration of stay is noted on the Alien Resident Certificate.
  • Applicants who enter the R.O.C. (Taiwan) without a visa and have obtained a work permit issued by competent authorities of the R.O.C. (Taiwan)  may apply to the Bureau of Consular Affairs or any of its Central, Southwestern, Southern, or Eastern Taiwan Offices for an extendable Visitor Visa.  Subsequently and with the extendable Visitor Visa, the applicants must apply to the National Immigration Agency for an Alien Resident Certificate.

Are there any visa waiver programs or specific visa categories for technical support staff on short-term assignments?

No. Please see above visa information.

Long-Term Assignments

What are the main work permit categories for long-term assignments to Taiwan? In this context outline whether a local employment contract is required for the specific permit type.

For long-term assignments, the work permit is still same. However, a foreign special professional complying with relevant requirement may apply for special work permit to enjoy the individual tax benefit.

For local employment, a local employment contract is required.

Provide a general process overview to obtain a work and residence permit for long- term assignments (including processing times and maximum validation of the permit).

Please see above procedures information.

Is there a minimum salary requirement to obtain a long term work and residence permit for assignments?

Unless specified otherwise, the monthly amount of average salary for employed foreigners shall be no less than NTD47,971.

Can allowances be taken into account for the salary?

Allowance can be considered as one of the item of salary.

Is there a fast-track process which could expedite the visa/ work permit?

No.

At what stage is the employee permitted to start working when applying for a long term work and residence permit (assignees/ local hire)?

They shall obtain work permit before starting to work

Can a short term permit/ business visa be transferred to a long term permit in Taiwan?

It cannot be transferred. However, it can apply for extension before expired.

Is it possible to renew work and residence permits?

Yes.

Is there a quota or system or a labor market test in place?

No.

General Immigration Related Questions

Would it be possible to bring family members to Taiwan?

Yes.

Is it possible to obtain a permanent residence permit?

Yes. However, they shall comply with relevant requirements.

What if circumstances change after the Work and Residence application process (e.g. change of employment or personal situation, including job title, job role or salary)?

The work permit or Alien Resident Certificate shall be amended in case there is any records is to be changed.

How long can a permit holder leave Taiwan without their permit becoming invalid?

No limitation. However, in case s/he back to Taiwan after the work permit/ARC was expired, it shall be applied as the new application, not the extension application.

Must immigration permissions be cancelled by the end of the assignment/employment?

Yes.

Are there any penalties for individuals and/or companies in place for non-compliance with immigration law?

Yes.

Other Important Items

List any other important items to note, or common obstacles faced, in Taiwan  when it comes to the immigration processes.

None.

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Disclaimer

All information contained in this publication is summarized by KPMG, a Taiwan partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the Taiwan Income Tax Act (as revised on 28 April  2021), Labor Pension Act, Labor Standards Act, Labor Insurance Act, National Health Insurance Act, Employment Service Act and Act for the Recruitment and Employment of Foreign Professionals.

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© 2021 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.