Taxation in Taiwan
We set out below some general introduction about the taxation system in Taiwan.
For enterprises
Each Taiwan company, or a foreign company which has a fixed business place in Taiwan, is obligated to pay business tax and corporate income tax on a regular basis.
1. Business Tax (commonly known as VAT): the tax rate is 5% in most cases. For some specific industries, the business tax rate may be higher. Each company shall file business tax reporting every odd month.
2. Corporate Income Tax: the corporate income tax rate is currently set at 20%. Each company shall file corporate income tax reporting each May.
After a Taiwan company pays its annnual corporate income tax, there may be proceeds remaining. If a Taiwan company intends to wire the remaianing proceeds to its foreign parent company, a 21% withholding tax will apply. If a Taiwan company decides to keep the remaining proceeds and not to wire the same to its foreign parent company, an undistribute earning tax of 5% will apply to the remaining proceeds.
For Individuals
Individuals in Taiwan are subject to a personal income tax, which rate is different among tax residents and non-tax residents.
1. Taiwan Tax residents: a progressive income tax rate scheme shall apply with tax rates ranging from 5%, 12%, 20%, 30%, and 40%, depending on the individual’s taxable income. Personal income tax filing shall be made each May.
2. Non-Taiwan Tax residents: In most cases, a non-Taiwan tax residents is subject to a withholding tax of 18% on salary received from a Taiwan company. A withholding tax of 20% and 21% may also apply to professional service fees and dividends respectively paid to a non-Taiwan tax resident.
Tax laws in Taiwan are complicated and implemented with details, exceptions and carve-outs. Please consult independent advice before you seek to apply the information below. If you require further assistance, please contact aliciahsulawyer@gmail.com.
