For any alien who has income from sources in the Republic of China, individual income tax shall be levied on the income derived from such sources in accordance with the Income Tax Act of the R.O.C. Alien taxpayers are divided into "Non-Residents of the R.O.C." and "Residents of the R.O.C." based on their length of stay. The following are the different ways for aliens to file income tax returns.
- "Non-Residents" of the Republic of China
- For an individual who stays in the Republic of China not more than 90 days within a taxable year:
- Income derived from sources in the Republic of China shall be withheld according to the withholding rate and paid at the respective sources.
- Income derived from sources outside the Republic of China will not be taxable.
- For an individual who stays in the Republic of China over 90 days:
- Individual income tax shall be declared and computed according to the withholding rate on his or her remunerations derived within the Republic of China for his or her services rendered in the R.O.C.
- For remunerations derived from outside the Republic of China, a proof of income by the foreign employer must be provided and examined by the local Taxation Bureau, witness, or qualified accounting firm. A copy of the accountant's license must be provided if it is examined by an accounting firm. If the aforementioned documents are not provided, the Taxation Bureau can adjust the tax rate according to the Alien Resident Tax Standards.
- "Residents" of the Republic of China:
An individual who stays in the Republic of China for 183 days or more within a taxable year is regarded as a resident and the individual's income tax shall be declared and assessed by a progressive rate on the amount of his or her net consolidated income which shall be the annual gross consolidated income, including the various incomes derived from within the R.O.C. and the remunerations derived from outside the R.O.C. for service rendered in the R.O.C., minus any exemptions and deductions.
※If the income of the taxable party is received in a foreign currency, the income will be converted into New Taiwan Dollars according to the exchange rate acknowledged by the government during the period of calculation.
※ The computation of the period of residence of an alien in the R.O.C. is based on the dates stamped on his or her passport (excluding the date of arrival and including the date of departure). If an alien enters and exits the country a number of times within a taxable year, the period of residence shall be the total number of accumulated days. The Immigration Agency is responsible for the computation of period of residence in Taiwan. Please visit the National Immigration Agency website for details.
The government prescribes the allowable personal exemptions on an annual basis. Personal exemptions increase by 50% if the taxpayer, his/her spouse and linear ancestor dependents are 70 years of age or older. For the 2016 individual income tax return, the personal exemption is NT$85,000 each for the taxpayer, his/her spouse and each linear ascendant, or NT$127,500 for those who are 70 years of age or older.
- Scholarships and subsidies granted by the government of the Republic of China or by foreign governments; international institutions; educational, cultural, and scientific research organizations or associations; and other public or private organizations for encouragement of advanced studies, research or participation in scientific and professional training, except for the scholarships or subsidies received as remuneration by the taxpayer for service rendered to the grantors.
- Income derived by virtue of office, of foreign diplomatic officials, consular officials and other persons entitled to treatment accordable to diplomatic officials in the service of foreign embassies, legations, and consulates in the Republic of China.
- Income derived by virtue of office, of employees, other than diplomatic officials, consular officials, and persons entitled to diplomatic treatment, who, being nationals of a foreign country, are employed by the embassy, legation, or consulate of their country or by subsidiary agencies thereof in the Republic of China provided that reciprocal treatment is accorded by the foreign country concerned to employees of Chinese nationality, employed by embassies, legations, or consulates of the Republic of China or by subsidiary agencies thereof, in the foreign country concerned.
- Salaries paid by foreign governmental agencies, organizations, or educational and cultural institutions to foreign technicians and professors of universities and colleges for services rendered within the territory of the Republic of China under technical cooperation or cultural and educational exchange agreements made by and between such foreign governmental agencies, organizations, or educational and cultural institutions and those of the Republic of China.
- Income derived from written articles, copyright books, musical compositions, musical productions, dramas, cartoons, or as remuneration for speeches or lectures on an hourly basis. However, the total amount of such income for the whole year shall not exceed NT$180,000.
- Various payments paid to personnel engaged in handling various kinds of examinations held by governmental agencies or academic organizations as commissioned by such agencies and in entrance examinations held by public and private schools of various levels.
A taxpayer may select either the standard deduction or itemized deductions and may, in addition thereto, declare special deductions. The amounts of the deductions allowed for the 2016 individual income tax returns are disclosed as follows (if the amount of total deductions on an itemized basis exceeds the amount of the standard deduction, a taxpayer may choose to claim the itemized deductions rather than standard deduction):
- Standard deduction: NT$90,000 for a single taxpayer and NT$180,000 for married persons filing jointly in 2016.
- Allowable itemized deductions:
- Contributions and donations: Contributions and donations made by the taxpayer, his/her spouse and dependents to educational, cultural, public welfare or charitable organizations or associations up to 20% of the gross consolidated income are deductible. However, there is no limit on the deduction of donations or contributions made for the support of national defense or troop-cheering or contributions to the government.
- Insurance premiums: Premiums paid by or for the taxpayer, his/her spouse and lineal dependents for life insurance, labor insurance, national annuity and insurance for military personnel, public servants or teachers are deductible up to NT$24,000 per person per year. However, there is no limit on the amount of premium paid for national health insurance.
- Medical and childbirth expenses: Medical and childbirth expenses incurred by the taxpayer, his/her spouse or dependents are deductible provided that payments so made are paid to public hospitals, private hospitals or clinics specially appointed under national health insurance, or hospitals having complete and accurate accounting records as recognized by the MOF. However, no deduction is granted for the portion (of such expense) reimbursed by insurance.
- Casualty Loss: The losses incurred by the taxpayer, his/her spouse and dependents from a disaster caused by force majeure. However, no deduction is allowed for the portion of the loss for which insurance benefit or relief has been received.
- Interest on a home mortgage: The interest payable on a loan from a financial institution by a taxpayer, his/her spouse and dependents for a primary residence may be deducted from his/her consolidated income, up to NT$300,000 per year per tax return. However, if a special deduction for savings and investment has been taken in the same tax return, the amount of the special deduction must be subtracted from the above mortgage interest. The deduction for home mortgage interest is limited to a single residence.
- Rent for housing: Rent for housing in Taiwan paid by a taxpayer, his/her spouse and lineal dependents used as a residence rather than for business purposes or to carry out professional services may be deducted from consolidated income up to NT$120,000 per year per tax return. However, no deduction is available for taxpayers who have taken the deduction for home mortgage interest on the same tax return.
- Special deductions:
- Loss from property transactions: The amount of loss from property transactions incurred by a taxpayer, his/her spouse and dependents is deductible up to the declared amount of property transactions income in the same year. However, if no income or insufficient income derived from property transactions in the same year is available for deduction, the loss may be carried forward to the next three years.
- Special deduction of salaries/wages: Deduction for a taxpayer, his/her spouse and dependents' salaries/wages can be claimed for up to NT$128,000 per person per year for 2016.
- Special deduction for savings and investment: Interest derived from deposits in financial institutions, income from trust funds in the nature of savings, or earnings and dividends derived at the time of transfer, gift, distribution of estate or upon giving up the tax-deferring right or delivering the stock to the custodian, on tax-deferred publicly issued and traded stock acquired on or before December 31, 1998 by taxpayer, his/her spouse and dependents may be deductible up to NT$270,000. However, this deduction does not apply to tax exempt interest on postal pass-book savings under the Post Savings Act or interests subject to separate taxation as stipulated in laws/regulations.
- Special deduction for the disabled and handicapped: If the taxpayer, his/her spouse or dependents is disabled or handicapped and hold handicapped handbook, a handicapped certificate or a mentally ill patient as defined in Article 3, Paragraph 4 of Mental Health Act, a deduction of NT$128,000 per year for the year 2016 may be made for each such person.
- Special deduction for educational tuition: If a child of a taxpayer is studying in a college or university, a deduction of up to NT$25,000 per student per year may be made for his/her educational tuition. However, the tuition of the Open University, vocational colleges, the first three years of five-year vocational colleges and of students who have accepted government subsidies is not deductible.
- Special deduction for pre-school children: A deduction of NT$25,000 per child per year may be made for the taxpayer who has children under or equal to five years of age. However, this special deduction may not be applicable to taxpayers whose applicable consolidated individual income tax rate, after the amount of the deduction for pre-school children has been deducted, is greater than or equal to 20%, or to those whose annual total amount of basic income is greater than NT$6,700,000.
The table of progressive tax rates for the year of 2015 and 2016 (Unit: NT$)
The table of progressive tax rates for the year of 2015 and 2016 (Unit: NT$)
||Net Taxable Income
||0 - 520,000
||520,001 - 1,170,000
||1,170,001 - 2,350,000
||2,350,001 - 4,400,000
||10,000,001 and above
The Ministry of Finance is responsible for tax management of foreign nationals. Please visit the National Taxation Bureau of Kaohsiung, Ministry of Finance website for details: Guide for Foreign Taxpayer.
For more information, please visit: Invest in Taiwan - Introduction of Taiwan Tax System