Taiwan Taxation System

Taiwan taxes can be generally categorized into (1) national taxes and (2) municipality, county and city taxes, and shown as below. Income tax, value-added tax, and customs duties for corporations and individuals are subject to national taxes, while land, building and acquisition taxes are included in local taxes. Taxes other than tariffs are collected from national tax offices under the Ministry of Finance, and local taxes are collected by tax offices under the respective local governments.

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Taiwan Taxation System - Type of tax in Taiwan

National Tax Local Tax
*Income tax *Agricultural land tax
*Estate and gift tax *Land value tax
Custom duties *Land value incremental tax
Value-added tax *House tax
Commodity tax *Deed tax
Tobacco and alcohol tax Vehicle license tax
*Security transaction tax Amusement tax
*Future transaction tax Stamp tax
Specifically selected goods and service tax

* Direct tax

Taiwan Income Tax

Income tax is classified into income tax for individual taxpayers and profit-seeking enterprises.

Individual Income Tax

In general, individuals are taxed on their Taiwan-sourced income.

If you have lived in Taiwan for more than 183 days in a year, you will be classified as a resident under Taiwan’s tax code and will be subject to the minimum tax calculation on the income from sources outside of Taiwan. Tax rates of 5 to 40 percent will be imposed depending on taxable income, and you can receive standard deductions, itemized deductions, and special deductions.

If you lived in Taiwan for less than 183 days in a year, your income will be subject to withholding tax in the fixed rate from 18 to 20% depends on the type of income.

Corporate Income Tax

Profit-seeking entities in Taiwan must report all its business income sourced from onshore and offshore (worldwide basis).

The corporate tax rate is 20%. The corporation is required to report its profit for profit-making business for the previous year by filing a statement of settlement from May 1 to May 31 every year. If your fiscal year is not from January 1 to December 31, you should report your corporate tax within five months after the end of that fiscal year.

In case of an income sourced from outside of Taiwan, the income tax paid under the applicable country’s tax laws may be deducted from the total corporate tax payment amount, but not from any tax that exceeds the tax amount calculated at Taiwan’s applicable tax rate.

Taiwan Taxation system - Withholding Tax

A withholding tax is an income tax paid to the government by the payer of the income rather than by the recipient. The tax is thus withheld or deducted from the income paid to the recipient. The withholding tax rate on income derived from the source of Taiwan for resident and non-resident recipients are summarized as below

Type of Income Resident Non-Resident
Dividends 0% 21%
Salaries and wages, commission 5% 18%
Interests 10% 20%
Rental, royalties, professional fees 10% 20%
Prizes 10% 20%
Pension Income 6% 18%

Value-Added Tax (VAT)

The business tax or VAT system in Taiwan is generally similar to many European countries. Except for specified in the tax regulations, VAT is levied on the sales of goods and services within the territory of Taiwan at each stage of the supply chain. The business tax levied on imported goods are calculated at the prescribed tax rate and the gross value after custom duty, commodity tax, or tobacco and alcohol tax if applicable. The business tax or VAT rate is summarized as the table below for reference.

Type of Business Tax Rate
Regular Tax Rate 5%
Export goods and services 0%
Income from reinsurance premiums 1%
Night clubs and restaurants with entertainment 15%
Coffee shops and bars offering companionship services 25%
Wholesale agricultural traders or small agricultural product suppliers 0.1%
Small-scale businesses 1%

Taiwan Taxation system - Stamp Tax

The stamp tax is levied on receipts of payments, deeds of sales of movable properties and real estate transactions and contractual agreements. The type of documents and tax rates are summarized below.

Document Type Resident
Receipts of payments 0.4%
Deeds of sales of movable properties NTD$12
Contractual agreements 0.1%
Deeds of real estate transactions 0.1%

The person who signs or issues the document has the responsibility to pay the stamp tax. In case if both parties want to keep the original document, both parties would be required to pay the stamp tax for the original documents.

Commodity Tax

The commodity tax is a one-off tax levied upon specified commodities which are manufactured domestically or imported.

Securities Transaction Tax

Except for government bonds and specified tax-exempt securities, all the securities transactions are subject to the securities transaction tax.

Type of Securities Transactions Tax Rate (on selling price)
Shares and options 0.3%
Transactions of futures 0.000001% to 0.6%

Taiwan Taxation System - Annual Filing

Interim income tax Income tax VAT Withholding tax
Frequency Annual Annual

Bi-monthly

(may apply for monthly)

Tax payment: monthly

Reporting: annually

Deadline 30 Sep of the current year 31 May of the following year 15th calendar day of the odd month

Tax payment: 10th of the following month

File to tax office: 31Jan of the following year

Tax amount 50% of prior year’s income tax payable Base on the profit of the preceding year Output tax minus input tax Tax withhold for the preceding month
File to National Taxation Bureau National Taxation Bureau National Taxation Bureau National Taxation Bureau
Audit required Not required
  • Revenue is over NTD$30m
  • Apply for loss carry forward
  • Listed company/specified industry
Not required Not required
Frequency Annual Annual

Bi-monthly

(may apply for monthly)

Tax payment: monthly

Reporting: annually

Deadline 30 Sep of the current year 31 May of the following year 15th calendar day of the odd month

Tax payment: 10th of the following month

File to tax office: 31Jan of the following year

Tax amount 50% of prior year’s income tax payable Base on the profit of the preceding year Output tax minus input tax Tax withhold for the preceding month
File to National Taxation Bureau National Taxation Bureau National Taxation Bureau National Taxation Bureau
Audit required Not required
  • Revenue is over NTD$30m
  • Apply for loss carry forward
  • Listed company/specified industry
Not required Not required

 

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FAQs for Taiwan Taxation System

You become a Taiwan tax resident if (1) you stay in Taiwan for 183 or more days in a calendar year, or (2) you hold Taiwan nationality and have a household registered in Taiwan and stay for at least one day. 

Please note that the day you come to Taiwan doesn’t count, but the day you leave does. It’s a good idea to keep track of the number of days you have been in Taiwan via the stamps on your passport.

Tax payments are due by June 3rd, after which there will be penalties for late payments.

For any company whose head office is located in Taiwan, its corporate income tax will be levied on its income derived within or outside of Taiwan (global income taxation).

For any company whose head office is located outside of Taiwan, its income tax will be only levied on its income derived within Taiwan.

A: The Taiwan corporate income tax is calculated as below:

(P = taxable income, T = tax payable)

(1) If P ≤ NTD$120,000, it is exempted from income tax.

(2) If NTD$120,000 < P ≤ NTD$200,000, T = (P – 120,000) X 1/2

(3) If P> NTD$200,000, T = P X 20%

There are 2 business tax systems in Taiwan:

  1. Value-added tax(VAT): it is for general industries and levied on the price of a product or service at each stage of production, distribution, or sale to the end consumer.
  2. Non-value-added tax: it is for certain regulated industries, e.g. banks, clubs.

The scope of VAT is as below:

  1.     Sales of goods or services within the territory of Taiwan (including services purchased from abroad and provided or used within the territory of Taiwan)
  2.     Imported goods

The VAT rate for general goods or services is currently 5% in Taiwan.

The VAT payable amount is calculated by output VAT(generated from sales) minus input VAT(generated from costs and expenses).