Declaring Freelance Sub/Tutor Tax with an Open Work Permit & APRC


#1

Hi guys,
I recently got my APRC and open work permit, and left my full-time job in order to travel and start looking into opening my own online business. The last 6 months I have been making money through subbing and one-on-one tutoring. My understanding was with an open work permit this is all above board (anyone heard otherwise?). Seeing as how I am paid cash for all of it, how do I declare my taxes (I want to keep to keep it above board).
TIA


#2

What is your online business idea?


#3

Looking at exporting ornamental things from here, teasets, incense burner, etc.


#4

If you give “lectures” and are paid by the hour, and you are not an employee (i.e. it’s not a guyong relationship), you should qualify for the gaofei exemption for the first $180,000 per year. I would keep track of everything even if it’s expected to be under that amount, just in case.

“Income from professional practice” (zhixing yewu) is taxed at 20% iirc, but you can deduct certain kinds of business expenses.

Ask a laywer or the tax office if in doubt.


#5

Please add the Chinese characters.
What would one be who is subbing at various cram school or teaching English in homes and coffee shops. Also doing short term classes in corporations or government offices. I guess that is gaofei.
Is there any difference in status is your income is combined with the wife who has the full time job?


#6

The official term for lectures in this context is 講演. (I just use “gaofei” as shorthand for the whole list of permitted activities.)

http://law.moj.gov.tw/Law/LawSearchResult.aspx?p=A&t=A1A2E1F1&k1=稿費

二十三、個人稿費、版稅、樂譜、作曲、編劇、漫畫及講演之鐘點費之收入。但全年合計數以不超過十八萬元為限。

A gaofei payment is not subject to withholding tax unless it exceeds $5000.

http://law.moj.gov.tw/Law/LawSearchResult.aspx?p=A&t=A1A2E1F1&k1=講演

執行業務者之報酬按給付額扣取百分之二十。但個人稿費、版稅、樂譜、作曲、編劇、漫畫、講演之鐘點費之收入,每次給付額不超過新臺幣五千元者,得免予扣繳。

They provide some clarification here for the gaofei category, but not for lectures.

http://law.moj.gov.tw/Law/LawSearchResult.aspx?p=A&t=A1A2E1F1&k1=講演

本法第四條第一項第二十三款所稱稿費、樂譜、作曲、編劇、漫畫等收入,指以本人著作或翻譯之文稿、樂譜、樂曲、劇本及漫畫等,讓售與他人出版或自行出版或在報章雜誌刊登之收入。
本法第四條第一項第二十三款所稱版稅,指以著作交由出版者出版銷售,按銷售數量或金額之一定比例取得之所得。
本法第四條第一項第二十三款規定之稿費、版稅、樂譜、作曲、編劇、漫畫及講演之鐘點費收入,均屬執行業務所得。

I have seen an official interpretation regarding 講演 but can’t find it now. It was by either the Ministry of Finance or the National Taxation Bureau, and the gist was that normal teachers don’t qualify, but it wasn’t 100% clear on where to draw the line.

The Ministry of Labor has stated (separately) that the category of income (salary vs. income from professional practice) should match the category of contractual relationship (employee-employer or worker-employer relationship vs. independent contracting), iow if you’re an independent contractor you’re not receiving salary, but like I said, if in doubt ask a lawyer or the NTB.

Edit:

If you’re not sure whether someone is your employer or your client, or there’s a dispute between you, your employer/client and/or a third party, it’s possible to spend years arguing about the distinction with the powers that be. They really ought to amend the law to prevent this type of situation. :2cents:

In general, going through the formalities of registration for insurance and issuing a 在職證明書, 離職證明書 or 服務證明書 identifying you as a staff member will probably make the administrative authorities see you as an employee/worker.


#7

FYI

Income Tax Act
http://law.moj.gov.tw/MOBILE/lawEng.aspx?pcode=G0340003

Article 14

Category 2:
Income from professional practice: any income of an individual from professional practice or performances after deduction of the rental for or depreciation of the place of business, depreciation of and repairing expenses for the facilities and equipment required for business, or the cost of medications, supplies, etc. sold to clients, salaries and wages for employees required for business, travelling expenses for practicing the profession and other direct and necessary expenditures, shall be the actual amount of income in this category.
Any individual engaged in professional practice shall at least keep a journal as his accounting book to provide detailed entries of all the operating revenues and expenses. For all business expenditures, documents of positive evidence shall be secured. The documents of evidence and account book shall be kept for a period of at least five years. Measures regarding the setting up, acquisition, and maintenance of the documents of evidence and account books and other related matters shall be prescribed by the Ministry of Finance.
Depreciation of buildings, facilities, and equipment used in professional practice shall be calculated in accordance with the Table of Service Life of Fixed Assets. The relevant provisions with respect to profit-seeking enterprise income tax of this Act shall be applicable, mutatis mutandis. Measures regarding the inspection of the documents of evidence, recognition of the revenues and expenses from professional practice and their account books and other related matters shall be prescribed by the Ministry of Finance.


Article 11 says who is a “practitioner of profession(執行業務者)”


#8

This is so complicated.
Simply put. How does one declare money from teaching inside someone’s house or coffee shop? Usually that’s a red envelope.
How does one declare money made from subbing in a cram school
Previously, this teacher had his own business but now, it is closed.
He just stared teaching a seminar to a company or government agency. He filled out the tax paperwork but no money was deducted from his pay.
I guess that is considered an independent contractor.

Regardless on how little income he makes… He files jointly with his wife who has the career job. Even with the business, his money was folded into his wife’s income. His name was only mentioned as a dependant.


#9

I think just a journal with some details on each (daily) job and money might be able to be a record of your income. If you give each customer a receipt and keep its copy on the journal, it could be more valid. You should request and keep a paycheck for any one time contract if possible.

Even if you file jointly with your spouse, the income you get should be reported as your income. I and my husband always file jointly, but neither of us is a dependant.

I think staff at taxation office would provide professional advice for free, if your question is how to declare that kind of money.


#10

What does “paycheck” mean. Usually a mother asks if the teacher is free. Then the teacher teaches for ninety minutes and hands the teacher a red envelope. Anything more complicated, the mother may not understand or offer the job.


#11

Sorry, I meant paycheck stub that showing nothing is deducted. When the money comes from a government agency or company.

In the case of a red envelope, I think the least thing you can do is recording it on your journal. I’m not sure whether it is rude to give her a receipt. It would be better if you can make a contract with the mother.

Anyway, Taxation office should provide more professional and practical information to people who want to pay tax.


#12

@tando @yyy do you have any idea of where fall money made as freelancer from foreign income under an open work permit (via gold card) ? Does that also fall under Income from professional practice with 20% tax on it, or is there any exemption / deduction for it?

Thanks!


#13

Off the top of my head, I would say

  1. yes, and
  2. no, unless you qualify for that temporary tax discount for high earners that was briefly discussed in another thread, but iirc it’s for all taxable income, not specifically freelance income.

Do look into deducting business expenses, though…