A Detailed Guide for Taiwan Tax Residency

Taiwan is a rapidly developing country that offers a friendly business environment and an excellent quality of life. The government has put in place a number of financial incentives to entice foreign investors to Taiwan, including special tax treatment for people and companies looking to set up residence or a base of operations there. However, you must have a fundamental understanding of the various tax residency categories in Taiwan to benefit from the government’s tax incentives.

Here’s a detailed guide to help you understand the various types of Taiwan tax residency:

1. Tax Residency based on the Period of Stay

The first type of tax residency in Taiwan is determined based on the period of stay. If you are an individual living in Taiwan for more than 183 days within a year, you will be considered a tax resident. In contrast, if you stay less than 183 days, you will be considered a non-resident for tax purposes. Tax residents are responsible for paying taxes on their global income, including income earned outside of Taiwan.

2. Tax Residency based on Domicile

The second type of tax residency in Taiwan is determined based on the domicile of the individual. According to the tax law, an individual who has a domicile in Taiwan will be considered a Taiwan tax resident, regardless of their period of stay in Taiwan. A domicile is generally considered to be your permanent residence, and if you have a home or other basic economic ties in Taiwan, then it is highly likely that you will be considered a tax resident. you will be considered a tax resident.

For example, if you are a foreigner who owns a property in Taiwan and spends a significant amount of time there, you may be considered a Taiwan tax resident under this category. Tax residents are required to report and pay taxes on their global income, including overseas income.

3. Tax Residency for Business Entities

If you are a business, the tax residency of your company is determined based on various factors such as the place of incorporation, business operations, the location of the management, and the activities carried out in Taiwan.

If your business is incorporated in Taiwan, then it is considered a resident for tax purposes regardless of its place of management. A foreign business entity is regarded as a Taiwan tax resident if it has a place of management in Taiwan or carries out a profit-seeking enterprise in Taiwan for more than 183 days in a year.

What is a tax residency in Taiwan?

The term “Taiwan tax residency” describes a person’s status as a resident in Taiwan for tax reasons. Residents of Taiwan are subject to the income tax rules of the nation, which mandate that they declare and pay taxes on income earned both domestically and internationally. Taiwan’s National Taxation Bureau and Ministry of Finance are in charge of the country’s tax administration.

When do I become a Taiwanese tax resident?

A person is regarded as a Taiwan tax resident if they live in Taiwan for more than 183 days during a tax year. If you have a household registration or an individual dwelling registered in Taiwan, you may also be regarded as a resident of Taiwan.

Starting from January 1st of your first full year as a Taiwan resident, you are required to file an annual income tax return, even if you have no income to report.

In Taiwan, when do I file my taxes?

The tax year in Taiwan begins on January 1st and ends on December 31st, just like the calendar year. Individuals in Taiwan must file their income tax returns by May 31st of the following year. For instance, the due date for 2022 tax returns is May 31, 2023.

How do I calculate my taxes if I am a tax resident?

Taiwan has a progressive tax system, which means that as income levels rise, so do tax rates. The following are the tax rates and brackets:

– Income up to NT 540,000 – 5%

– Income over NT 540,000 up to NT 1,210,000 – 12%

– Income over NT 1,210,000 up to NT 2,420,000 – 20%

– Income over NT 2,420,000 up to NT 4,530,000 – 30%

– Income over NT 4,530,000 up to NT 10,310,000 – 40%

– Income over NT 10,310,000 – 45%

To calculate your tax liability, you need to first determine your taxable income, which is your total income minus any allowable deductions, exemptions, and credits. The income tax rate will then be applied to your taxable income to determine your tax liability.

How can we help?

If you are unsure about your Taiwan tax residency status or need assistance filing your tax return in Taiwan, we are available to help. At Premia TNC, we assist in determining your residency status, calculating your tax liability, and preparing and filing your tax return. Our team of tax professionals can also help ensure that you take advantage of all available deductions and credits and avoid any penalties or interest on unpaid taxes.

Conclusion

It’s always advisable to consult with a professional accountant or tax advisor to guide you on the tax implications of your specific circumstances in Taiwan. By doing so, you can ensure that you comply with the tax regulations while maximizing the benefits of Taiwan’s tax incentives and enjoying the many benefits of living in this vibrant, growing country.

In summary, tax residency is an essential consideration for individuals and businesses operating in Taiwan. By understanding the different types of tax residency in Taiwan, you can plan your financial activities in compliance with the tax laws and regulations of the country, to minimize your tax liabilities and keep your business running smoothly.

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