[quote=“rocky raccoon”]I switched jobs in August. My new company seems confused about the 183 day rule and has been withholding 20% of my salary.
What can I do to ensure that I won’t be taxed the rest of the year at 20%?[/quote]
Tell the company accountant that you have already passed 183 days this year. If there is any problem ask them to contact the withholding desk at the local tax office (though the instructions on the withholding form should be clear enough).
Thanks jlick, I’ll have a chat with them tomorrow about this.
A friend of mine has been living here bar occasional trips abroad for about two years.
You could say he is retired, but he plans to leave sometime next year and start work again.
His income is his savings from abroad.
He has no job in Taiwan, nor hasn’t ever worked in Taiwan (or plans to) and enters on ‘landing visas’
What is the scenario with regards tax for him?
How would the ‘taxman’ find him?
Also what if people are entering Taiwan for business purposes and spend more than 183 days in Taiwan?
What happens there?
And their income is from abroad and aren’t officially employed in Taiwan.
Someone entering on landing visas and staying more than 183 days would have to pay taxes on their income from work in Taiwan. They might get away with it for a while but if they ever need to apply for a residence permit, work permit or get caught working without a permit, they might be noticed.
Its kind of a grey area I think. Unlike the USA you are not required as a resident to pay tax on your worldwide income. That means if you can prove you are not earning money because you are in Taiwan, you should be fine (I would think).
Say you are retired in Taiwan and your income is from your pension from abroad.
But that means that you have to keep squeeky clean. NO extensions permitted on your landing visa, etc.
And they may investigate to make sure you are not deriving income from actually working in Taiwan.
The current situation is pretty much that, but it is a bit complicated:
1-90 days: Income related to services provided in Taiwan AND paid in Taiwan are taxable. (If paid outside of Taiwan, not taxable.)
91+ days: All income related to services provided in Taiwan is taxable regardless of where paid.
For tax year 2010 things will change. If your total income is over TWD$6m then you will have to pay a 20% tax on all foreign income over TWD$1m. This is part of the Alternative Minimum Tax that has been phased in over the last few years.
I thought I had a grasp of this 183 day rule, but I have been getting conflicting info on my specific situation. So your feedback would be gratefully appreciated.
I had been working for a school for a year and then my ARC expired on July 31, 2009 . Then I went on a visa run and came back on August 1, 2009. I found a new employer and started working on September 1. They are withholding 20% since they claim the 183 day rule resets if you leave the country/get a new ARC card. Is this true? Will I get 14% of this money back when I file for taxes?
Thanks for your help.
My understanding is for tax purposes, it’s physical presence in the country, regardless of ARC status. That’s not to say that your new employer won’t cover their ass and withhold 20%.
How much you get back will depend on the tax rate of your net taxable income. If you’re making a pile of money, you are taxed at a higher rate…
The resident tax rate is based on cumulative time in Taiwan in a calendar year, regardless of visa status, any change of status, or trips outside the country. If they are at all confused, they can read the directions on the withholding form or contact the withholding desk at their local tax office. You will get back any overpaid amount after you file your taxes next May, but it may be a year from now before you see that money again.
The resident tax rate is based on cumulative time in Taiwan in a calendar year, regardless of visa status, any change of status, or trips outside the country. If they are at all confused, they can read the directions on the withholding form or contact the withholding desk at their local tax office. You will get back any overpaid amount after you file your taxes next May, but it may be a year from now before you see that money again.[/quote]
It seems that Modest Mouse is in the same situation as I’m in. When you switch employers they just stick to the rule the tax office tells them: take 20%.
I brought this to the attention of my payroll dept and they said that it’s the rule. I don’t know how to politely resolve this because it’s hard to say, well my friends online told me that… 
When I did bring it up, they said I had to bring them proof that my old company actually taxed me at 20% for the 183 days I was there. I really don’t want to bother my old company with this issue, or get the tax receipts from the tax office for the first 6 months of the year.
But then again, I don’t want to pay 20% for the rest of the year because the payroll dept doesn’t know what’s going on.
jlick, you said: “If they are at all confused, they can read the directions on the withholding form or contact the withholding desk at their local tax office.”
I’m in Xin Dian, so do I ask the accounting lady to check with the Taipei County tax office? And it seems that the Taipei County tax office should check with the Taipei City tax office to prove that I already paid my 20% earlier this year. But I guess that’s asking a bit much.
[quote=“rocky raccoon”]When I did bring it up, they said I had to bring them proof that my old company actually taxed me at 20% for the 183 days I was there. I really don’t want to bother my old company with this issue, or get the tax receipts from the tax office for the first 6 months of the year.
jlick, you said: “If they are at all confused, they can read the directions on the withholding form or contact the withholding desk at their local tax office.”
I’m in Xin Dian, so do I ask the accounting lady to check with the Taipei County tax office?[/quote]
It has nothing to do with what taxes you already paid. It has to do with how much time you’ve been in the country this calendar year. More than 183 and withholding is at the lower rate. You could be sitting on your ass on the beach in Kending doing nothing for the first 183 days and if you started working after that you would still be considered a resident under the tax law. They should just need to see your passport to check this.
What I was referring to above about the withholding form is that they should check the withholding form they have to file for your salary. There are directions on the form about whether the employee is considered a foreign or resident under the tax law. It’s pretty clear about the requirements. If they can’t figure that out then they can ask the withholding desk at the tax office the company files withholding at. (E.g. if your employer is in Taipei City Songshan District then they would contact the Songshan District tax office.) If you are up to it you can go in and ask them yourself.
For Taipei the links to the district offices are in the lower right on this page:
This makes sense and thank you for your help.
It’s really sad that I can’t get a clear answer from the people in my company that are supposed to be the experts. I guess new laws aren’t so clear for them to follow, especially when it comes to foreign employees.
I’ll take my passport to work tomorrow and try to sort it out. [deep breath]
Thanks again. 
The current situation is pretty much that, but it is a bit complicated:
1-90 days: Income related to services provided in Taiwan AND paid in Taiwan are taxable. (If paid outside of Taiwan, not taxable.)
91+ days: All income related to services provided in Taiwan is taxable regardless of where paid.
For tax year 2010 things will change. If your total income is over TWD$6m then you will have to pay a 20% tax on all foreign income over TWD$1m. This is part of the Alternative Minimum Tax that has been phased in over the last few years.[/quote]
So that means if you have income declared in Taiwan but if its over 6 million NTD total you will have to pay 20pct of the portion that you declare is foreign earned income?
So what if you dont derive ANY income from TAiwan and only have foreign income. Are you still going to be taxed as well on that?
The USA taxes your worldwide income for residents and citizens. I dont think any other country does that do they?
And if they do, which countries if anyone knows.
And far as I know, the physical presence in Taiwan over 183 days means you pay tax as a resident for that year.
To be subject to the new tax scheme you have to be a resident under the tax law AND have total income (Taiwan plus foreign) over TW$6m AND have foreign income over TW$1m.
After that it gets complicated. The basic explanation is that you pay 20% tax on the foreign income. But then there’s exceptions about deducting foreign taxes paid on the income or if the tax paid on Taiwan income is already more than 20% of total income.
If your total income is over TW$6m.
There’s three cases:
Cases 1 and 2 are both pretty common. Case 3 is what US tax law is based on and is rare.
Taiwan is moving from case 1 to case 2.
Thanks Jlick. I dont think that is smart. Taiwan wants to attract well to do retiree to retire in Taiwan in the near future. Those retirees will bring money into the country and stimulate the economy with their buying power. This will make some of those targetted feel just that “targetted” and then they wont come to retire in Taiwan. It doesnt make any sense for them to pay Taiwan any tax on earnings that have nothing to do with Taiwan.
I dont think it is correct for the US govt to require taxes be paid for US citizens on income not earned in the USA.
Taiwan has picked up a lot of “bad habits” from the US in the last few decades. First we had no restrictions on living in Taiwan, but now we have a lot of those restrictions. And now they want to pattern tax laws on US laws too?
:bluemad:
Until you are living overseas, have an emergency and go running to the US consulate for help.
Doesn’t England do the same?
Anyway, unless you are making over US$86K/year, you aren’t going to pay US tax on it. You just need to file.
I’m in the same situation as a couple of others who have posted here.
I have been here for over 183 days this year. I changed jobs part way through the year. the HR girl at my new place is insistent that I have to pay 20% tax for the first 183 at the new company. She can’t show me anything to confirm her rule, but has said if I can show her anything to disprove it she will change my rate to 6%.
Can anyone post a link or send me the relevent information?
ey.gov.tw/ct.asp?xItem=59659 … 1335&mp=35
There is a telephone number at the end of that page. You could perhaps visit them for more info?
More links that may be useful:
reachtoteachrecruiting.com/t … rules.html
eslisland.com/guide/taxes.html
pwcias.com/webmedia/doc/6331 … erview.pdf
hirecruit.nat.gov.tw/english/htm … me_Tax.asp
pkf.com/site/webdav/site/pk … 202009.pdf
IF the above is not enough there are plenty more links out there.
Not that it hasn’t happened, but I’ve never seen a local boss recognize and admit they were wrong and change policy or procedure, especially when it’s a foreign employee pointing it out. Usually we are just seen as trouble makers.
But more power to ya!
To discuss the “correct” withholding tax rate with an HR company can be a hassle, and not lead anywhere, since c-y-a may just prevail from the company’s side.
However, it is important to be aware of the principle: Withholding is only temporarily withholding, and has NOTHING to do with actual tax burden, calculated the following year for the past year, based on annual declaration in May.
Hence, even if withholding was (maybe) “too high”, it will all get evened out next year - you will either get reimbursed by the Taiwan tax authorities, or you will have to pay a lower final amount than what you would have to have coughed up with a lower previous withholding rate.