The Ultimate Guide of Tax Refund in Taiwan For Foreign Workers

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.

The tax rate for Taiwan is usually between 5-40% depending on the gross income acquired; for income between 0-560,000 Taiwanese dollars, the tax rate is 5%, and for income between 560,001 and 1,260,000 Taiwanese dollars, the tax rate is 12%, for income between 1,260,001 and 2,520,000 the tax rate is 20%, for income between 2,520,001 and 4,720,000 the tax rate is 30% and finally if you are a resident of Taiwan and earn above 4,720,001 a year you would be charged at a tax rate of 40%.
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.

How You Can Get a Tax Refund in Taiwan as a Foreign Worker?

The taxes that are withheld by your company on your behalf are usually refunded without the need for any application, and the worker would sign the “authorization to collect tax refunds” papers, after which the company would collect the funds from the tax authority and send it to the worker via mail. It is important to check if the amount is complete before signing the receipt.
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.

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.

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.

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