[quote=“milkalex”]
for 2012 I gonna pay resident tax cause I have a contract. Just need to figure out how to explain that to my company… 
[/quote]
No idea what you mean by this. The contract has nothing to do with anything. Your company will deduct at 18% until you reach 183 days, unless they trust you not to leave before the 183rd day. If you leave before the 183rd day and they haven’t taxed you at 18% they will have to pay that tax themselves plus they get fined.
well I will just quote it:
[quote]1. Arrive in Taiwan After the 183 Day Cutoff
You arrive in Taiwan AFTER July 2nd and sign a one-year contract. There are less than 183 days left in the calendar year you’ve arrived in. You will be taxed at 18% for all the remaining months of the current year. When the new year starts the time remaining on your contract has you in Taiwan for MORE than 183 days. So, you’ll see your rates reduced to the normal level for the remaining months on your contract.
An example: you arrive in Taiwan on November 1st and sign a one-year contract. For November & December you would be taxed at 18%, since for that year you’re here for less than 183 days. For January through October of the NEXT year you would be in Taiwan for more than 183 and would see your tax rate reduced to the standard level. Even though on January 1st you’ve been in Taiwan for just 1 day of the new calendar year your school goes by the more than 183 days remaining on your contract in that year, and lowers you to the standard rate. [/quote]
[quote=“milkalex”]well I will just quote it:
[quote]1. Arrive in Taiwan After the 183 Day Cutoff
You arrive in Taiwan AFTER July 2nd and sign a one-year contract. There are less than 183 days left in the calendar year you’ve arrived in. You will be taxed at 18% for all the remaining months of the current year. When the new year starts the time remaining on your contract has you in Taiwan for MORE than 183 days. So, you’ll see your rates reduced to the normal level for the remaining months on your contract.
An example: you arrive in Taiwan on November 1st and sign a one-year contract. For November & December you would be taxed at 18%, since for that year you’re here for less than 183 days. For January through October of the NEXT year you would be in Taiwan for more than 183 and would see your tax rate reduced to the standard level. Even though on January 1st you’ve been in Taiwan for just 1 day of the new calendar year your school goes by the more than 183 days remaining on your contract in that year, and lowers you to the standard rate. [/quote][/quote]
That don’t look right to me. The rule is the calendar resets each year. The contract is irrelevant. You do 183 days each year and then you get to switch to the lower rate. But you get back 13% of the 18% you’ve paid anyway (in July/August of the next year).
[quote=“the bear”][quote=“milkalex”]well I will just quote it:
[quote]1. Arrive in Taiwan After the 183 Day Cutoff
You arrive in Taiwan AFTER July 2nd and sign a one-year contract. There are less than 183 days left in the calendar year you’ve arrived in. You will be taxed at 18% for all the remaining months of the current year. When the new year starts the time remaining on your contract has you in Taiwan for MORE than 183 days. So, you’ll see your rates reduced to the normal level for the remaining months on your contract.
An example: you arrive in Taiwan on November 1st and sign a one-year contract. For November & December you would be taxed at 18%, since for that year you’re here for less than 183 days. For January through October of the NEXT year you would be in Taiwan for more than 183 and would see your tax rate reduced to the standard level. Even though on January 1st you’ve been in Taiwan for just 1 day of the new calendar year your school goes by the more than 183 days remaining on your contract in that year, and lowers you to the standard rate. [/quote][/quote]
That don’t look right to me. The rule is the calendar resets each year. The contract is irrelevant. You do 183 days each year and then you get to switch to the lower rate. But you get back 13% of the 18% you’ve paid anyway (in July/August of the next year).[/quote]
The misunderstanding is between the withholding amount and the amount that will ultimately be kept by the government when you file taxes.
The above is correct for the amount that will ultimately be kept by the government. But technically, employers are supposed to withhold the higher amount for the first 6 months of each calendar year in case you bail. Some do, some don’t. If you stay in the country less than 6 months in one calendar year, you are supposed to pay 18%, but if the employer didn’t withhold that amount, the government loses. Dunno if they will go so far as to collect it from the employer.
So here is my fun situation. I’ve been living and working in Taiwan for a number of years and my company has been withholding monthly at about 6%. I file jointly with my wife and we almost always have to pay in additional tax.
In Sep 2010 my company assigns me offshore for 12 months to help set up a subsidiary. I still get paid locally for the duration of the assignment. For 2010 I meet the 183-day rule, thus a tax resident. But for 2011 I do not meet this rule, yet my company continued to withhold at 6%. I am back in Taiwan and suddenly (after 2011 year-end) our HR gets in touch with me and seems to have come to a realization that they should have withheld at the higher rate in 2011, I’m assuming at 18%. I suspect they are going to want me to pay in the extra tax they should have withheld so that they don’t get into any trouble with the taxman, (18%-6%) x income for 2011. Bugger! Any thoughts?
[quote=“snowy”]So here is my fun situation. I’ve been living and working in Taiwan for a number of years and my company has been withholding monthly at about 6%. I file jointly with my wife and we almost always have to pay in additional tax.
In Sep 2010 my company assigns me offshore for 12 months to help set up a subsidiary. I still get paid locally for the duration of the assignment. For 2010 I meet the 183-day rule, thus a tax resident. But for 2011 I do not meet this rule, yet my company continued to withhold at 6%. I am back in Taiwan and suddenly (after 2011 year-end) our HR gets in touch with me and seems to have come to a realization that they should have withheld at the higher rate in 2011, I’m assuming at 18%. I suspect they are going to want me to pay in the extra tax they should have withheld so that they don’t get into any trouble with the taxman, (18%-6%) x income for 2011. Bugger! Any thoughts?[/quote]
Initial reaction…your company assigned you overseas but with no change to your conditions of employment, therefore they are liable for any tax implications in Taiwan from this action. GET IN THEIR FACES. You’ll have to pay the tax but tell them they must compensate you for your lost income.
[quote=“jlick”]The actual law is that those who are resident (at least 183 days per calendar year) pay progressive tax rates and those who are non-resident pay a fixed rate, currently 18%. The law used to be if you qualified as a tax resident in one year, you could maintain that status in the following year as well, even if you stayed less than 183 days in the subsequent year. That rule has been scrapped.
The problem is what to do about withholding. Companies are free to decide on their own whether to withhold at the resident or non-resident rate for the first 183 days each year for their long-term resident foreign employees. The catch is that if the company wittholds at the resident rate but the employee leaves before the 183 day point, and doesn’t pay the tax due at the non-resident rate, then the company is on the hook for the difference.
So basically if a company is willing to withhold at the resident rate, they are putting a lot of trust in you not to skip out on paying the bill.
The government really needs to bring back the old rule. Having to qualify over and over again is just nuts.
(Also you probably paid 20% in your first year. The rate was changed concurrent with the new tax rule.)[/quote]
I have a question about this “withholding” issue. Jlick, how do you know companies are free to decide what rate to withhold at? I ask because I asked my employer if it was an issue of trust that he decided to withhold at 18% for the 1st 6 months of this current year, and he said he had no choice, that it is mandated by the government. Do buxibans pay taxes once a year on their employee’s behalf? Do they send the taxes in monthly (I say this as I am paid monthly in cash with a pay slip), and if so, is it really at their discretion at which rate to withhold?
For background I started working at this buxiban in November of 2010, and my current contract extends past 183 days in 2012.
Withholding must be paid within 10 days of the payment, so if you are paid monthly, your employer has to pay withholding monthly.
I’m curious as to why 6% as the final tax rate is always referenced in these “183 day rule” threads. Surely even after meeting requirements as a resident the final tax withholding rate is not fixed in stone at 6% but sliding according to income? I really hope I’m wrong here, can anyone shed some light?
Thanks for the quick reply, that’s really useful information. Would you also happen to know if it is illegal or maybe what kind of penalties/ disincentives there are under the new rule if a Buxiban owner wants to withhold at a standard rate for a foreign English teacher those first 183 days? I was at the tax office today but forgot to ask that one. Anyway, if anyone knows smething about this, I would appreciate it.
@plasmatron, I believe you are correct about the sliding rate based on income, I’m not sure why 6%, or rather 5% as it has been changed to, is referenced so often. I would guess most English teachers would make enough to be taxed @ 12%, and the tealit article states that 13% (now 12%) is the most common.
i have a question about the return. so technically jan 1, 2013, residents are allowed to file taxes for year 2012. say i started work jan 1, 2012, from jan-june, i’d be taxed 20%, and then july- dec, i’d be taxed at 6%, then i’d get a refund for the 14% from jan-june correct? how long does it take to get the money? is it in the form of a direct bank transfer or something like a physical check? sorry this thread is extremely long, maybe this has been answered before?
Yes, it takes 4 months to get the money. You can opt for a direct credit, have a bank cheque mailed to you, or swing by the tax office to pick it up, or have a proxy pick it up.
I’d like to ask some questions:
hi!!! iam also confused regarding that rule.iam a factory worker i finished my 3yrs contract in year 2008 of march…but then i go back in same company september 2008 after 2 or 3mos my broker told me that i need to pay tax at sum nt$23.000 OMG thats unlawful really…but i have nothing to do but to pay.however i finished again my 3yrs contract i went home sept.2011 in that long years i only received once refund of my tax until now i dont receive another tax refund i knew i’ll still have one refund…i ask my co worker to update and ask our broker about my tax he said that i am not in the list who will receive tax this year…thats unfair …so please help me to get my tax…thanks…(madz)
[quote=“scomargo”]This is probably the most commonly asked question I’ve seen in Taiwan. Hopefully this page will help.
tealit.com/taxes.htm[/quote]
I have been to Taiwan since 2011 and I have ARC expire date 2013, July 31st (so over 183 days) but my school still takes 18% (non-resident) tax. What I can do. I have tried to talk to them but they said it is the way it should be done 
Any suggestions? Thank you.
Hi,
I am trying to read through all the posts… but there’s many of them. Also my friend who has similar work situation told me his company just found out about this rule, and started withholding his tax from salary (18%). This is my 3rd year working in Taiwan…and I am still confused.
Last year my company helped me to do taxes, and in the end I’ve paid 5% for the whole year, from the amount of money after deductions, which was very reasonable amount of money. There was no 183 days rule, no withholding, no 18% tax at all. Our accountant is planning to do same thing for me this year too.
Last year, the tax office said nothing about it… so… is it really that complicated? Or is the 183 rule applied only for the 1st year of work? I don’t remember it being used on me before though 
Hi I’m currently on a student visa and have been pretty much regularly in Taiwan since Jan. 1, 2013; recently obtained work in TW so will switch to a work visa - just want to confirm that I will just have to pay the lower “normal” tax rate, and not the inflated 20 percent. I read the first couple posts which said this is true, ie, even if I switch visas, as long as I’m physically present in Taiwan for 183 days+ I get the regular rate, but they are old so I just want to make sure that is still in effect.
Thanks!
Michael
You pay tax the same as Taiwan residents/citizens if you are physically present in Taiwan for 183 days of that calendar year, whether you were working or not.
Thanks.
The last 3 questions (Michal, mukashi and purple hoodie) all relate to the same confusing part of the taxes. Your school will still withhold 18% of your paycheck for the first 6 months every year that you are in Taiwan. It doesn’t matter if you have been here for 3 years. Every year it resets because it’s impossible to know if someone will go home during the first six months. It sucks but you get the money back (over 1 year later…). There might be some buxibans that don’t do this but they are liable for any unpaid taxes if their employee leaves the country w/o paying (this happens).
There might be an exception to the 18% for APRC or JFRV holders.