“Guide for Foreign Taxpayer”
ntak.gov.tw/english/CmsShow. … 61347693,5
I never thought it so difficult to explain a progressive tax system. 
The 20% for the 1st 6 months is done to ensure that you file for taxes in year 1. When you actually file for taxes they will determin what tax bracket you belong to after deductions (you get the same deducations as any local) and tax accordingly. If during the year, excess tax receipts were collected, you get a refund. Most English teacher will find themsolves in the 6-13% tab brackets (if only because not all taxable income is reported)
How is that so difficult to comprehend? Have you ever filed for taxes in the US (required BTW fora ll US passport holders)or Canada? Those tax systems are much, much more complicated.
The 20% withholding rate is not a special rate for foreign workers as is often posted here. It is the withholding rate for anyone who is not considered a resident under the tax code. It applies equally to ROC citizens who have been out of the country for extended periods. (Yes, they can get away without paying the higher rate in many cases.) Whether you are considered a tax resident has nothing to do with citizenship, visa status, or possession of an ARC.
What really needs to be changed is the asinine requirement that you need to be here at least 183 days in a calendar year before you can be taxed at the normal rate. For example, someone who arrives in early July will have 20% withholding for a year before going down to the lower rate, and for the first calendar year will be taxed at the flat 20% rate without refund.
In my opinion the qualifying period should be 183 days in any 365 day period at which point you are considered a tax resident from the beginning of that period. Since tax returns are filed through the end of May, the few people who won’t be able to prove 183 days by then probably showed up in the last few days of December, in which case they have no or minimal income for those few days. On the other hand, those who have already racked up 183 days by the time they file in May really shouldn’t still be considered tax non-residents.
And as many others here have noted, even a 20% tax rate is ridiculously low compared to most western countries. Once you get to pay the resident tax rates it’s practically a bargain.
I agree with posters above who say that filing taxes here is simple, and that rates are very reasonable.
Yes it does, but not a tax resident.
[quote]From what you say, I’m guessing you’re not. So, someone working in Taiwan for only one year gets taxed 20% for the first 6 months, 6% for the remaining 6, and then has to turn around and do a tax return to get 14% back of his first 6 months’ taxes.
That’s annoying.[/quote]
There is a reason behind this: in the first 6 months you are considered a non-resident, i.e. if you run away within 183 days the government wants to make sure you have paid the correct tax. If you stay longer you declare your tax and the rate will be determined based on your income (which may be more than 6%, see below).
20% is the withholding rate for salary, that’s fixed. 6% is wrong, it’s the rate for a yearly income of up to NTD370,000.
If you earn more the rate goes up, see this table from the link by Tyio Ma.
It’s not really complicated to me. It all makes sense, but that initial 20% can be a real killer.
Basically, anyone who works full time is going to be paying at least 13%. To me, that’s really high. In Korea, the withholding is the same from the beginning of the year to the end.
If I were making the same money in Taiwan as here, I’d be paying 21% in the end where here, I’m paying around 2.145%. The income tax is 9% here, but they include the deductibles on your monthly. Things like pension and health insurance are deductible. They further reduce the amount you owe. Normally, I guess, you’d have to get it all back by doing a return, but it doesn’t seem so here. A basic amoun of a million Won is also a deductible (something like that to the best of my memory). Taxes are a good deal here.
The tax rate for 60,000 NT in Korea is less than 1%. It’s 13% in Taiwan. Way too much.
That’s wonderful…but you have to live in Korea
True, but it’s not worth it to live in Taiwan with the lower salaries and higher taxes. Taiwan is by no means a paradise. So, I say, “What’s the difference?”
Actually the average taxes for all provinces and territories in Canada for a 60,000 NT salary would be 16.03%. (That’s combined federal and provincial/territorial). A difference of 3.03%. Manitoba is the highest (18.36%). Nunavut is the lowest (13.33%).
Snow & Snot, Chalk & Cheese
a) My salary is not lower.
b) All in, when compared to state and federal US taxes, the Taiwan effective taxe rate is far lower
c) In my mind even S. Korea is a gulag. But, feel free to stay there if you are happy.
The effective tax rate for a worker earning TWD60000 per month using only standard exemptions and deductions would be 6.3%. If claiming rental deduction, parent over 70 years old, other dependents, etc. then the effective tax rate would be lower. By direct comparison, the effective tax rate on the same amount of income in Korea using only standard deductions and exemptions according to their automated calculation service is 1.2%.
TWD60000 is an entry level wage for an English teacher though. An experienced teacher working full time can often make TWD100000 a month. In that case, using only standard deductions and exemptions, the effective tax rate in Taiwan would be 8.9%. The effective tax rate in Korea would be 5.6%
At TWD150000/month income the effective rate is 12.9% in Taiwan and 9.42% in Korea.
One interesting difference is that Korea taxes worldwide income while Taiwan only taxes local income. That may make a difference for some taxpayers.
The effective tax rate for a worker earning TWD60000 per month using only standard exemptions and deductions would be 6.3%. If claiming rental deduction, parent over 70 years old, other dependents, etc. then the effective tax rate would be lower. By direct comparison, the effective tax rate on the same amount of income in Korea using only standard deductions and exemptions according to their automated calculation service is 1.2%.(I get a little under 1%)
TWD60000 is an entry level wage for an English teacher though. An experienced teacher working full time can often make TWD100000 a month. In that case, using only standard deductions and exemptions, the effective tax rate in Taiwan would be 8.9%. The effective tax rate in Korea would be 5.6% (I get a little over 4.2%)
At TWD150000/month income the effective rate is 12.9% in Taiwan and 9.42% in Korea. (I get 7.85%)
One interesting difference is that Korea taxes worldwide income while Taiwan only taxes local income. That may make a difference for some taxpayers.[/quote]
Yeah, I was thinking that there must be some deductibles to consider to lower the amount payable in Taiwan. I’m not sure about other tax payers, but for foreginers it seems there is an industry standard here to tax taking into account all of the deductibles.
I wonder why my figures are different than yours? Maybe it’s the currency converter I’m using: xe.com/ucc/convert.cgi
In Korea, there’s more of a chance though that your employer is not forwarding what he deducts to the tax office, but that’s not your problem. It’s the owner’s responsibility and it’s also his/her responsiblity to provide you with the proper tax certificates so you can fill them out and submit them.