Verified Facts
In Taiwan, tax rates range from 5% to 45% for individual income, with a corporate tax rate of 20% and a value-added tax (VAT) rate of 5%, making it essential for expats and businesses to understand the tax system and its implications.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Taiwan has a territorial taxation system, where residents are taxed on their income earned within Taiwan, regardless of where it is sourced. Non-residents are taxed only on their Taiwan-sourced income. To be considered a tax resident in Taiwan, an individual must have a domicile in Taiwan, which is determined by factors such as the location of their family, assets, and business activities. Alternatively, an individual who has stayed in Taiwan for more than 183 days in a calendar year is also considered a tax resident.
The tax system in Taiwan is administered by the Ministry of Finance, which is responsible for collecting taxes, enforcing tax laws, and providing tax guidance to taxpayers. The tax year in Taiwan runs from January 1 to December 31, and taxpayers are required to file their tax returns by May 31 of the following year. The tax authority in Taiwan also has a tax treaty network with 32 countries, which helps to prevent double taxation and facilitate the exchange of tax information between countries.
Personal Income Tax
| Income Bracket (TWD) | Tax Rate |
|---|---|
| 0 - 540,000 | 5% |
| 540,001 - 1,200,000 | 12% |
| 1,200,001 - 2,400,000 | 20% |
| 2,400,001 - 4,400,000 | 30% |
| 4,400,001 and above | 45% |
Taxpayers in Taiwan are entitled to various deductions and allowances, such as a basic living allowance, housing loan interest, and charitable donations. Tax returns must be filed electronically, and payments can be made online or at designated banks. The tax authority in Taiwan also provides a tax withholding system, where employers are required to withhold taxes from their employees' salaries and remit them to the tax authority on a monthly basis.
Corporate & Business Tax
- The corporate tax rate in Taiwan is 20%, which applies to both domestic and foreign companies.
- Small and medium-sized enterprises (SMEs) are eligible for tax incentives, such as a reduced tax rate of 17% for the first TWD 120,000 of taxable income.
- Taiwan has several free trade zones, which offer tax exemptions and other incentives to companies that operate within these zones.
- Companies must register with the tax authority and obtain a tax identification number before commencing business operations.
- Companies are also required to file tax returns on a quarterly basis, and to pay taxes on a monthly basis.
VAT / Sales Tax
- The standard VAT rate in Taiwan is 5%, which applies to most goods and services.
- A reduced VAT rate of 0% applies to certain goods and services, such as exports, international transportation, and financial services.
- Certain goods and services, such as healthcare and education, are exempt from VAT.
- Taiwan has a tourist refund scheme, which allows foreign tourists to claim a refund of VAT paid on certain goods and services.
For Expats & Foreign Workers
- Tax residency rules apply to expats and foreign workers, who are considered tax residents if they have stayed in Taiwan for more than 183 days in a calendar year.
- Taiwan has double taxation treaties with 32 countries, which help to prevent double taxation and facilitate the exchange of tax information between countries.
- Expats and foreign workers are required to register with the tax authority and obtain a tax identification number before commencing work in Taiwan.
- Expats and foreign workers are also required to file tax returns and pay taxes on their income earned in Taiwan.
- Taiwan has a social security system, which requires employers to contribute to the social security fund on behalf of their employees.
- Expats and foreign workers are allowed to remit their income abroad, subject to certain restrictions and requirements.
Crypto & Investment Income
- Investment income, such as dividends and interest, is subject to a withholding tax of 20%.
- Capital gains from the sale of securities are subject to a tax rate of 20%, or are included in income and taxed at the applicable tax rate.
- Cryptocurrency is considered a financial asset, and gains from its sale are subject to tax at the applicable tax rate.
- Taxpayers are required to report their investment income and pay taxes on their gains from investment activities.