Do Foreigners Pay Higher Effective Tax Rates than Taiwanese?

[Andrew]

@bingobango

This thread made me curious: I filed my taxes for 2020 here a couple of months ago. I was given no refund, even though I was taxed at 18% each month since August 2020. I was told I did not get a refund because I was (barely) not in Taiwan for 183+ days for 2020. So, I was told I do not get a refund now, but I will get one in 2022 for filing 2021 taxes for the months in 2021 that I am being taxed at 18%. Is that correct? I am admittedly pretty confused about this - I was under the impression I would get a refund for the 5 months in 2020 I was getting taxed at 18%…

It’s presumably because you were taxed as a non-resident on account of being here less than 183 days, so a flat rate of 18% with no exemption or deductions. It seems correct (there’s a big difference between less than 183 days and more than 183 days - something to consider when working in Taiwan for part of a year).

[bingobango]

So unfortunate! So, if I got here about two or three weeks earlier I would have gotten 13% of that 18% that was taxed back. Ouch…

[Andrew]

@bingobango

So unfortunate! So, if I got here about two or three weeks earlier I would have gotten 13% of that 18% that was taxed back. Ouch…

Yes, and it would actually be considerably more than 13%, because as a resident you’d also be eligible for at least the standard exemption (NT$88k), standard deduction (NT$120k), and special deduction for salary and wages (NT$200k) (as a minimum - this all assumes you’re unmarried with no dependents), so the first NT$408k would be free of tax. You might have ended up not paying anything.

(I should note here that I’m not sure if those amounts are affected by only being here for part of the year, say 183-330 days. I think I read somewhere that they’re pro-rated, but can’t be bothered looking for it at the moment. Don’t know whether your income abroad before you arrived would also factor in, either.)

[tando]

@bluejasn

Are you talking about working the full 15 years to access retirement in Taiwan via monthly payments from the New Labor Pension?

I think the poster is talking on Old-age pension of Labor insurance pensions.

[frank_hnd]

@Furious000

Have you been able to claim your parents as dependents. That’s the most obvious deduction not easily available to foreigners.

This deduction is available to foreigners as for everyone else. If your parents are abroad you just need to provide proof that you sent money abroad. Works the same way for TW citizens.

[frank_hnd]

@tando

@Furious000 's point may be it is not as easy as locals do, because foreigners most provably need some extra documents.

It is exactly the same as TW citizens if their parents were abroad. Obviously less paperwork if they are in TW, but you get the point.

[lostinasia]

@frank_hnd

If your parents are abroad you just need to provide proof that you sent money abroad.

Not necessarily - it seems to depend on the tax office. Every year I show the tax office copies of my birth certificate; my parents’ passports; and some kind of bill or form from the previous year that includes their names, to verify that they were still around that year (car insurance, travel insurance forms, whatever).

Caveat: maybe years ago I did submit evidence I was sending money abroad, and that counts forever. I have no recollection of doing that. But there are many things I have no recollection of.

[frank_hnd]

@lostinasia

Not necessarily - it seems to depend on the tax office.

Anyways, my point was that the deduction is there and @Furious000 was claiming otherwise.

[dan2006]

Every year I point out the deduction for family option and the jobsworths always tell me that that’s not for me… let’s just go with the basic deduction… oh it won’t save you much tax etc. I guess they don’t want to do the paperwork. And tbh I’ve been too lazy to push them. I still go into the office the old fashioned way