Businesses and entrepreneurs around the world are considering moving to Taiwan due to its robust economy. The quick economic reforms in the 70s, which were regarded as the “Taiwan Miracle,” quickly made the region a developed economy. Today, Taiwan ranks 15th in the global ease of doing business charts and ranks as the 8th largest Asian economy and 18th largest in the world. Taiwan is in the advanced economic group and the high-income’s group in the World Bank. With the region’s effort to improve the service-oriented industry and attempts to diversify its trade markets, the environment is even better. Taiwan has a well thought out economic policy system, an indirect tax system, and some quite appealing terms, like the tax refund in Taiwan for foreign workers.
In 2014, Taiwan ranked 15th in the top 20 destinations in the world by the Mastercard 2014 Global Destination Cities Index, meaning that a lot of people do visit the country, and, in most instances, they have to file and pay tax. In this piece, we will be discussing how tax refunds for foreign workers in Taiwan work, the tax regulations in Taiwan, how to get a tax refund, some exemptions in tax laws, and how Premia TNC can help in issues regarding tax and tax refunds in Taiwan.
Taiwan Tax Regulation for Foreign Workers
Although the Taiwanese Government has made it relatively simpler to file taxes online, it is still a complicated process. There are many things to take note of as a foreigner in Taiwan who wants to clear his taxes, like, your length of stay, nature of the job, and income. Furthermore, in Taiwan, there are three instances that determine how tax is charged for foreign workers. Foreigners are classified as either Residents or Non-Residents, and the tax rate is calculated according to their status.
- Foreigners who stay in Taiwan for less than 90 days (Non-Resident): For people who are coming to Taiwan and spend less than 90 days before going back are exempted from paying most taxes in the country. The salary income is not taxed, but the taxes from other income are withheld. The value added taxes or sales tax can be refunded, and there is no need to file a tax return. There are some exceptions on transactions such as property sales, and stock trade; in this case, the foreigner must declare his earnings and pay some amount of tax before leaving Taiwan.
- Foreigners who stay in Taiwan for more than 90 days but less than 183 days (Non-Residents): Basically, the taxation for foreigners stay in Taiwan more than 90 days but less than 183 days is very similar to the above. The only difference is that the salary income obtained from foreign companies is not taxed, but if a Taiwanese company pays the foreigner, then the income should be subjected to taxes, at the 18% rate.
- Foreigners who have stayed in Taiwan for more than 183 days(Resident): People like this are considered to be full-time residents of Taiwan and are obliged to pay the full amount of taxes on products, sales, services, and income based on the normal tax rates, some income taxes can still be withheld if they don’t exceed a specific amount given by the government.
Taiwan residents are subject to progressive income tax rates: 5% for income up to NT$590,000, 12% for NT$590,001–1,330,000, 20% for NT$1,330,001–2,660,000, 30% for NT$2,660,001–4,980,000, and 40% for income exceeding NT$4,980,000.
It is advisable that as a foreigner if you are earning above 4 million Taiwanese dollars, you should try to keep the number of days you spend in Taiwan at a stretch below 183 if possible so that you would be at the 18% flat rate for non-residents.
Tax Refund in Taiwan for Foreign Workers: VAT vs. Income Tax
It is important to differentiate between VAT and income tax refunds when discussing the tax refund in Taiwan for foreign workers. VAT refunds apply only to foreign tourists who have stayed fewer than 183 days and made qualifying purchases at designated stores. These refunds are typically claimed at the airport before departure and are not relevant to foreign workers.
Foreign workers, on the other hand, are generally eligible for income tax refunds. These refunds arise when the amount of tax withheld during the year exceeds the actual tax liability, especially if the worker becomes a tax resident after staying over 183 days. Filing an annual tax return allows eligible workers to reclaim this excess.
Recognizing this distinction helps foreign workers focus on the correct refund process and avoid confusion with tourist VAT refunds.
How You Can Get a Tax Refund in Taiwan as a Foreign Worker?
Foreign workers in Taiwan must file their individual income tax returns to qualify for a tax refund. However, those who have not resided in Taiwan for at least 183 days within the tax year are not eligible for a refund. If a worker is unable to collect the refund check in person or has already left Taiwan, they may authorize a representative to collect or cash the check on their behalf by submitting a Power of Attorney.
However, for some other tax refunds, such as sales tax and VAT, there are some offices that you can visit. The offices include “Taiwan Tax refund “labeled stores, which are legal offices that give tax refunds, the tax refund service, and the tax refund service at airports and seaports.
You would get a document called the tax refund claim, which would be filled with the tax refundable receipts, and then you would submit the document to the offices mentioned above; if you are at the airport, you might be required to further check the goods at the customs office before it is verified.
After your claim has been verified, you will receive a receipt called “Tax Refund Assessment Certificate Accessible for Eligible Goods by Foreign Travelers,” which can be cashed out at banks or service counters in the airport as you are leaving the country.
Tax Refund in Taiwan for Foreign Workers: Timelines and Policies
Foreign workers in Taiwan must ensure they meet the correct filing deadlines in order to successfully claim a tax refund, as timely submission is essential for processing. The tax year is from January 1 to December 31, and tax returns must be filed between May 1 and May 31 of the following year. Filing within this period is necessary to secure any eligible refund and avoid late penalties.
Foreign workers planning to leave Taiwan permanently before year-end must complete tax filing before departure. In such cases, a tax agent must be appointed locally to file on their behalf. This ensures that any potential refund can still be processed by the National Taxation Bureau. Alternatively, returns can be filed online via the Ministry of Finance’s eTax portal, which streamlines document submission and refund requests.
To prepare for filing, workers should gather essential documents such as their Alien Resident Certificate (ARC), passport, income statements, and supporting proof for any deductions. Once submitted, approved refunds are usually issued via local bank transfer.
Exclusions in Tax Laws
There are some special exceptions that you can make when calculating your tax, these are some fees and privileges that can be removed from your income before calculating your tax. They include things such as insurance fees, medical bills, donations, and rental fees.
Tax Refund in Taiwan for Foreign Workers: Avoid These Typical Errors
When applying for a tax refund in Taiwan for foreign workers, several common mistakes can delay or prevent successful claims. Miscounting residency days is a frequent issue. For tax purposes, the day of arrival is excluded while the day of departure is included. Misjudging these dates can affect residency status and tax rates.
Another issue is failing to appoint a tax agent before leaving Taiwan. If workers depart before the filing season and do not assign a representative, their return may not be submitted on time, leading to missed refunds.
Incomplete documentation is also a problem. Workers should ensure they keep income statements, valid identification, and relevant deduction records. Filing with complete and accurate information is key to a smooth and timely refund process.
How Premia TNC Can Help
Premia TNC is a leading business and tax consultancy agency in countries such as Taiwan, Hong Kong, Singapore, Vietnam, Korea and Malaysia. Calculating taxes can be quite stressful and tedious, especially for foreigners who are not too familiar with the tax laws of Taiwan. If you have issues regarding your tax, contact Premia TNC, and our tax experts will be available to help.
FAQS
Would I start paying taxes immediately when I arrive in Taiwan?
A: No, you would have to spend more than 90 days before you are charged significant taxes in Taiwan.
How can I calculate my tax rate?
A: There are fixed tax rates for non-residents residents and progressive tax rates for residents. All you have to do is to calculate your days stayed in Taiwan to determine your resident status. You can then calculate the income tax based on the fixed or progressive tax rates. Please note that there are exemptions and deductions you can claim if you are using progressive tax rate to calculate the income tax.
How can I get my tax refund?
A: Foreign workers must file their individual income tax return to be eligible for a tax refund in Taiwan. However, those who have not stayed in the country for at least 183 days are not entitled to a refund. If a worker is unable to collect the tax refund check in person or has already left Taiwan, they must complete a Power of Attorney to authorize an agent to collect or cash the check on their behalf or with a tax refund claim.
