183 days in Taiwan, vs 183 days at company- an 18% tax withholding conundrum

For foreigners working in Taiwan, companies are supposed to withhold 18% of their salary until the foreigner has stayed in Taiwan for 183 days in a given year, and withhold 5% after this. Not all companies do this, but they are supposed to, or at least encouraged to do so. It’s a massive hassle, but we do eventually get the money back after about a year, of course with no interest earned…

Relevant laws (click to expand):

Chinese version

Ministry of Finance website:

如果居留天數滿 183 天的話,則屬於我國境內居住的個人,扣繳義務人應依照各類所得扣繳率標準第 2 條規定辦理扣繳。

Standards of Withholding Rates for Various Incomes, Article 2:

納稅義務人如為中華民國境內居住之個人 ,或在中華民國境內有固定營業場所之營利事業,按下列規定扣繳:

一、薪資按下列二種方式擇一扣繳,由納稅義務人自行選定適用之 。但兼職所得及非每月給付之薪資,依薪資所得扣繳辦法之規定扣繳,免併入全月給付總額扣繳。

(一)按全月給付總額依薪資所得扣繳辦法之規定扣繳之。碼頭車站搬運工及營建業等按日計算並按日給付之臨時工,其工資免予扣繳,仍應依本法第八十九條第三項規定,由扣繳義務人列單申報該管稽徵機關。

(二)按全月給付總額扣取百分之五。

English version - partly translated by me

Ministry of Finance website:

If the number of days of residence exceeds 183 days, the individual is considered residing within the territory of the Republic of China, and the withholding tax should be handled according to Standards of Withholding Rates for Various Incomes, Article 2.

Standards of Withholding Rates for Various Incomes, Article 2:

Article 2

Where a taxpayer is an individual residing within the territory of the Republic of China, or a profit-seeking enterprise having its fixed place of business within the territory of the Republic of China, tax shall be withheld in accordance with the following rules:
1. Tax on salary is withheld in either of the following ways, one of which is to be selected and applied by the taxpayer, however, for the wages for a part-time job and/or a salary not paid monthly, tax shall be withheld in accordance with “The Regulations Governing the Withholding of Tax on Wages”:
(1) The total monthly payment is withheld in accordance with the Regulations Governing the Withholding of Tax on Wages. For porters in docks and stations and temporary workers in the construction industry, etc. whose wage is calculated and paid on daily basis, their wages are exempted from tax being withheld, but the tax withholder shall still file a withholding report to the tax collecting authority-in-charge in accordance with Paragraph 3 of Article 89 of the ITA.
(2) 5% of the total monthly payment is withheld.

My previous company for example, did not withhold anything, except for a small percentage (less than 5%) of our bonuses. However, my current company insists that 18% is withheld for 183 days each year. I have no problem with 18% of my salary being withheld for the first 183 days of each year, but my current company has thrown a bit of a spanner into the works. They calculate the 183 days not based on time actually in Taiwan, like they are supposed to, but instead they calculate it based on the first 183 days in the year, so January 1st to the start of July. Although wrong, this does not bother me, because it would only serve to help me if I had left the country for a length of time during the first 183 days of the year. The problem comes from how they calculate this for new staff.

For new staff, they don’t calculate the 183 days from January 1st onwards, but from onboard date onwards. This means that although tomorrow I will have been in Taiwan 183 days this year, the company will still deduct 18% of my salary until I have been in the company for 183 days.

This is pretty bad, because it means I’ll have tens of thousands of dollars locked away for another year making no interest, or growing, and being eaten by the high inflation rates we are facing now.

I also confirmed with the Ministry of Finance, and have in writing that:

Those who have resided in Taiwan for 183 days in one income year are considered as “individuals residing within the territory of the Republic of China”. The number of days of residence is based on the number of days in Taiwan during an income period, not based on the duration of the employment contract, therefore, if you stay for 183 days in an income year, you don’t need to deduct 18%.

Despite all this, my company claims that their system calculates it from January 1st + 183 days, or for newcomers, start date + 183 days. HR won’t budge, and I want to know if you guys think I have any leg to stand on, legally speaking. I wouldn’t want to sue them, but I want to do something. I am considering raising this to higher ups, but it’s a risky move if they don’t side with me.

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If they don’t agree even after showing them the regulations, then contact Ministry of Labor and let them explain the laws to HR.
Having withheld 5% or 18% tax is a big difference.

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Your company is retarded.

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Companies are not required to hold 18% however they may be held responsible for paying the 18% should Mr/s Foreigner decide to leave the company and/or Taiwan, hence it’s in their interest to hand it over to the tax authorities. The percentage held after the 183 period doesn’t have to be 5%, it could be 0%, the company is simply covering the tax liability should the employee disappear and leave the company to foot the bill.

They’re just covering their ass to avoid being on the hock should new employee do a runner, can understand it’s easier for them to do so based on join date rather than time in Taiwan. It will only make a big difference to employees hired in the second half of the year and even then not a huge one and only once. Absolute worst case Johnny foreigner joins July 1st and gets an extra 13% taken from his salary for 6 month. For the sake of convenience let’s give Johnny 100K a month so his extra withhold is 13K adding up to 78,000 for the 6 months. Unless Johnny is a bit of an investment genius he’s not going to make a whole pile on that 78K.

I’d be more pissed at the 18% happening for the first 6 months of every year for a long term employee than the one off new hire. As an established employee, especially one with any sort of financial decision making authority in a company, not been trusted to pay taxes would irk me.

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Result: after ignoring my last email where I sort of threatened to leave (by saying I left my last company because they violated my rights) if they withheld 18% again this month, today I checked my account and they didn’t withhold it this month, so I guess I win.

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You are on a roll at the moment. Winning left right and center.

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As long as you don’t become an employee targeted as a trouble maker and then fired at the first chance

Rule of thumb aka Rule number 1 in a lot of smaller companies:

The company is always right

Rule number two :slight_smile:

Should the company be actually wrong Please see Rule Number 1

The trick is to earn enough that this Forced Savings plan adds to the retirement account for yourself

Rule of Thumb came from
The Boss being the Thumb
And you Mister or Miss Peon being the Ant

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Remains to be seen next year! Given that it’s now July I’m guessing they’ve gone with the 183 from January 1st, a step forward nonetheless!

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Yes, and next year should be no problem since I’ll be at the company from Jan to July anyway.

Yes because its july. You will get the real actual salary with 0% deduction from august

Actually for us, since our pay day for June salary is after July 2nd (which is 183 days in country), even my June salary has zero deduction. I think my next deduction will be my December 2022 salary which I will receive in early January. Or maybe that one will be considered 2022 salary, and not deducted.

Pay date is usually first week of next month in all companies and yes in january u will get 18% deducted salary of december. I am not sure why they didnt deduct june salary since by theory the salary u will get in august (which is july salary) will have no deduction. You should contact the HR to avoid any unnecessary deduction or any issue.

I’m guessing they’ll deduct 18% from Jan to June, hopefully I’m wrong.

Not in the company I work for and actually illegal in Taiwan without employee agreement.

Taiwan taxes are based on when you receive income, not on when it was earned.

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That is correct.

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