Is this really how company taxes work in Taiwan?

Business Entrepreneurship
1

So without going into detail, new company and discussing with accountant. Summary as follows:

2 ways to do taxes.

“Audit” system which applies to companies pulling 30,000,000+ or. Who request. This style is what I’m used to, you have basic tax brackets and deduct your expenses.

Under $30,000,000/year it’s calculated based on your company’s main product. So government has a set amount which they announce every year. Generally in and around 6-7%.

Let’s say you make a million. And your main business tax number is 6%.

1,000,000 @ 6 % is 60,000.

You then pay 17% tax on that number.

If your number is under $120,000 then no tax. This means if you make 2 million or under at 6% you don’t pay income tax. But most companies make more than this. So say you make $5,000,000 total. @ 6% the taxabyle income is $300,000. 17% of that is $51,000.

Now I have checked online and asked my, and 2 other accountants plus other people and they all say this is how it works. What I’m having a hard time believing is 5 million gross income pays only 51k tax…That’s basically 1% tax. Then you pay personal tax on top, which with above example is 5% of 300,000 = $15,000 + $51,000 = 61,000 for 5 million which is still under 2%…

Is this for real?

I’m used to southern Taiwan, hence my skepticism. In the “proffesional” advice I receive.

2

Yes, but the exact percentage depends on your business type and gross income. There is a list published by the government for business types, gross incomes and allowable declared percentage. Note that it only applies to SMEs.

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3

Yes for sure, depends on your product type. Mine is rated at 6%, so just used that as the example.

So it’s really like this, nothing hidden? Just under 2%? As a Canadian I’m having a truly hard time comprehending this to the point I’m worried…

4

Please note that starting this year the rate is 20%, with an extra clause for very small businesses:

For profit seeking entities with less than NT$500,000 in taxable income, the corporate tax rate is 18% in 2018, 19% in 2019, and 20% in 2020.

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5

Do you have a link?

6

https://www.ntbna.gov.tw/singlehtml/5f5746a30ef04963823b2302b9146208?cntId=b1eb3b3cb1914390ab6a4be61cd9fc65

That link will probably change in the future, as they usually do for government websites. Google for " 擴大書面審"

7

From talking to 2 CPAs, method 2 is only allowed if method 1 has less net profit. Also there’s 5% tax on retained profits. If you don’t retain it and cash it out, you’ll get hit with Taiwan’s ~40% income tax. Americans get hit with the 13% GILTI tax if profits are retained.

The US is lobbying other countries for a “minimum worldwide corporate tax”, I wonder how this will change things in a few years

By the way if you’re a non-american, why not set up an offshore Singapore corporation? They have 0% corporate tax if you’re offshore. This Taiwan tax trick will cause issues if you get audited, both CPAs told me that the company will be fined if incorrectly using method 2.

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