Tax Figures
Corporate Income Tax
Company tax rate: 17% at a NT$120,000 threshold level
Income Tax Rate
Resident and nonresident individuals are subject to consolidated income tax on income earned from Taiwan sources, including all employment income in Taiwan. The tax that foreign nationals are subject to depends on the length of stay as well as residence status.
They are considered residents if they reside in Taiwan, or have resided in Taiwan for at least 183 days in a tax year.
Under the Alternative Minimum Tax (AMT) Law, the rate for individuals is 20%. Under the AMT, taxpayers calculate both the tax due under general income tax and under the AMT, and pay the higher of the two amounts.
- NT$1 – 520,000: 5%
- NT$520,001 – 1,170,000: 12%
- NT$1,700,001 – 2,350,000: 20%
- NT$2,350,001 – 4,400,000: 30%
- NT$4,400,001+: 40%
Sales Tax
The sales tax in Taiwan is known as the business tax (BT) and is imposed through the VAT and non-VAT system.
The basic rate of the BT is 5%.
Exports, export-related services, items sold by duty-free shops, goods sold to export-oriented entities in tax-free export zones and goods sold to a bonded factory are exempt from this sales tax.
Withholding Tax
- Dividends: 20% imposed on dividends paid to a nonresident, unless it is reduced by a tax treaty.
- Interest: 15% imposed on interest to a nonresident, unless it is reduced by a tax treaty.
- Royalties: 20% imposed on royalties paid to a nonresident, unless it is reduced by a tax treaty.
Other Tax
- Customs duty: Customs duty is payable based on the dutiable value of the volume of goods imported. It is calculated on the basis of the true transaction price.
- Excise duty: Includes commodity taxes, tobacco and liquor tax.
- Stamp duty: Stamp duty is levied as follows:
- 4% of the receipt amount for cash receipts
- 1% of the contract value for a contractual agreement
- 1% of the contract value for sale, exchange or division of real property
- Property tax: Includes the land value tax, imposed at 1% – 5.5% of the public land value, house tax and deed tax on property.
- Estate tax: flat tax of 10%.
- Gift tax: flat tax of 10%.
Time to prepare and Pay Taxes
221 hours
Employers Social Security and statutory contributions
No social security taxes are levied in Taiwan, but nominal labor insurance premiums and national health insurance premiums are imposed by all business entities.
- Labor Insurance Scheme: 6.35%
- National Health Insurance Scheme: 5.008%
Employees Social Security and statutory contributions
No social security taxes are levied in Taiwan, but nominal labor insurance premiums and national health insurance premiums are imposed by all business entities to the employee.
- Labor Insurance Scheme: 1.8%
- National Health Insurance Scheme: 1.4731%
Payroll
Taiwan does not impose a complicated or onerous tax system on foreign companies operating in the country. The primary concerns for a foreign company that needs to comply with tax laws in Taiwan are: Individual income tax for employees in Taiwan, social security costs, VAT, withholding tax, business tax and permanent establishment concerns.
Remote Payroll
A remote payroll in Taiwan is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Taiwan. This applies to both local and foreign employees. One option for a non-resident company to payroll its employees (local and foreign) in Taiwan is to use a fully outsourced service like a GEO or PEO which will employ and payroll the staff on their behalf.
Local Payroll Administration
In some cases, a company will register their business in China under one of the forms available, (RO, WFOE or JV) but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.
Internal Payroll
Larger companies with a commitment to Taiwan may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Taiwanese payroll, and can fulfill all tax, withholding, and payroll requirements.
This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Taiwanese employment laws.
Currency
Taiwan Dollar (NTD)
