Individuals are only subject to income tax on Taiwan source income with income derived from foreign sources being exempt from income tax. Residents, both Taiwanese and foreign nationals, pay tax on net consolidated income calculated as the total income received from all Taiwan sources less exemptions and deductions. Non residents who stay in Taiwan not over 90 days within a calendar year are taxed on their gross income under the withholding tax system without allowance for deductions and exemptions.
For the non resident staying in Taiwan over 90 days but less than 183 days within a calendar year has no other Taiwan source incomes, but salaries from local employers, he/she is basically not required to file the income tax return if the 18% tax on the local salaries is withheld. In practice, however, a non resident may prefer to file annual tax return voluntarily, without allowance for deductions and exemptions, in order to keep a clean tax record in Taiwan.
Residence is determined on the basis of whether a person is domiciled in Taiwan and lives in Taiwan on a regular basis. An individual will also be considered to reside in Taiwan where although not domiciled in Taiwan they reside in Taiwan for 183 days or longer within a calendar tax year.
2. Taxable Income
The types of compensation deemed to be taxable income include:
3. Tax Exempt Income
Tax Exempt Income includes:
4. Deductions and Exemption
A taxpayer may select either the "Standard Deduction" or "Itemized Deductions" and may, in addition thereto, declare "Special Deductions".
Standard Deduction: For 2011, NT$ 76,000 for a single taxpayer, NT$ 152,000 for a taxpayer and his (her) spouse.
Itemized Deductions, subject to certain limitations, include:
Special Deductions, subject to certain limitations, include:
For 2011, the personal exemption for taxpayer, his (her) spouse and each dependants is NT$82,000.
5. Tax Rate
The new tax brackets and rates of resident individual income tax for 2011 are as follows:
|Net Taxable Income||
Rates on Excess
Non resident aliens staying in Taiwan for less than 183 days within a calendar year are taxed at withholding rate on gross income.
6. Alternative Minimum Tax
The Income Basic Tax (IBT) Act is effective from 2006. (Please refer to section of profit-seeking enterprise income tax.) According to the Act, deducted non-cash donation and some income exempted from income tax (e.g. capital gain derived from non-listed stocks, insurance payment received by the beneficiary of a life insurance policy or annuity in which the beneficiary and the proposer are not the same person, the amount of market value in excess of the par value of stock dividend acquired by employees,??) shall be included in the basic income of the individual and subject to IBT. Individualís income derived from sources outside Taiwan is taxable from 2010.
7. Foreign Individual Income Tax
Foreign individuals who are employed and assigned to work in Taiwan are liable for income tax as follows table:
|Taxpayer's status||Taxable income||Tax rate||Filing required|
|Non-resident stays for ess than 90 days in the tax year||Remuneration received in Taiwan for services rendered in Taiwan||18%||No (tax already withheld)|
|Non-resident stays for 90 days or more but ess than 183 days in the tax year||Remuneration received for services rendered in Taiwan wherever received||18%||Yes (filing as a non-resident)|
|Resident stays for 183 days or more in the tax year||Remuneration for services rendered in Taiwan wherever received, net of exemption and deductions||Varied||Yes (filing as a resident)|
8. Individual Income Tax Filing
Between May 1 and May 31, a taxpayer must file an income tax return for the preceding year.