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):
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。
English version - partly translated by me
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.
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.