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Taiwan’s personal income tax law can be a little complex at first glance – this guide should help you know your rights and work out your tax burden, so you can be sure of paying only what you need to.

Taiwan has two systems of taxation for individuals based on the concept of residency. This is not to be confused with being an ARC holder – to be a tax resident you simply need to be in the country for at least 183 days in any given tax year (1st January to 31st December) – you do not need to have been an ARC holder during that time (although of course other issues crop up concerning the legality of your work if you don’t have a work permit). If you’re classed as a non-resident, it’s simple: there is a flat rate of 20% tax on everything you earn. Because of this 183-day-in-one-year requirement a foreigner arriving in June of 2005, for example, would be considered a resident from November of the same year, while someone who arrived two months later would not be classed as a resident until July 2006.

Once you’ve attained residential status you are taxed in the same way as anyone else in Taiwan – you become part of the mainstream taxation system. This is based on a sliding scale ranging from a bottom rate of 6% up to 40% for top earners. Also, this rate is backdated to include time in the same tax year that you spent as a non-resident (and were taxed at 20%).

So, assuming that you are resident, unmarried with no children and all your income is earned income, you can follow these steps to calculate your liability:

Step 1: Determine your gross annual income

Fairly straightforward, just add up your salary and any bonuses.

Step 2: Identify any possible tax exemptions and deductions

There’s a standard NT$74,000 exemption for every taxpayer. Now deduct another NT$75,000 from your gross annual income because you earned your money (rather than inheriting it, for example). On top of this, there is a choice of deductions – you can choose two from the following list:

• Rent (up to NT$120,000 p.a.) – this only works if your landlord is paying tax on the income they get from you (or is otherwise exempt, for example by virtue of being a veteran, civil servant or teacher). Many landlords do not declare this income, so you will not be able to claim this deduction if this is the case. Most are very open about this – just ask.


• Charitable donations – up to 20% of your gross salary (with certain exceptions). Must be receipted donations to legally registered charitable organizations.


• Insurance premiums (up to NT$24,000)


• Medical and maternity expenses


• Losses from natural disasters


• Mortgage payments

Choose the two that are the highest. Does that add up to more than NT$44,000? If so, great – subtract that number from your net income. If it doesn’t, then forget about these individual deductions and just claim the standard NT$44,000. There are other, extra deductions available for disability, investment and property losses, but these lie beyond the scope of this article.

So, by now you have a net income figure for the year. The next step is finding out which tax band you fall into.

Step 3

The higher bands have a standard deduction, which takes in to account progressive taxation:

Net income (NT$)	Tax rate (%)	Progressive deduction (NT$)
0 – 370,000	6	none
370,001 – 990,000	13	25,900
990,001 – 1,980,000	21	105,100
1,980,001 – 3,720,000	30	283,300
3,720,001 +	40	655,300

Take your net income; multiply by the appropriate tax rate, minus the progressive deduction. This is your tax liability. Anything over this that you have paid throughout the year you will be entitled to claim back the following year. If you have made the transition from non-resident to resident, there may well be a sizable rebate headed your way.

A few words of warning – nothing in Taiwan is certain once the bureaucracy is involved, but taxation is a little more reliable than some other areas. Obviously this article is for informative purposes only and we accept no liability for any inaccuracies it may contain. A side issue is that some unscrupulous employers do try to make a little on the side by taking the full tax from you and then declaring a lower tax to the government – cover yourself by asking for tax receipts.

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