I have held my visa through my spouse for the past 5 years and I work for a large bilingual school. This is the first year we have been taxed as we had been untaxed like other Taiwanese teachers. I have no problem with paying taxes, but the school insists the tax withholding rate is 18% and there is nothing they can do about it. I was told “it is the law” and that “there is nothing the school can do about it.”
I was told that if I had any questions I should contact the tax office.
The tax office said I should be taxed 5% like other Taiwanese.
Now what?
Any idea how to proceed? I see R.H. has a drafted letter above, but that is kind of old.
Could there be any reason my employer would be doing this?
What could my employer do differently to bring my tax withholding rate dow to the 5% I am entitled to?
As a parent and the sole breadwinner in my family, 18% is a cruel amount to withhold without any deductions simply because I am a non-resident. It certainly does not encourage people to have families.
As I understand it (which is not saying much) a JFRV is not the same as permanent residence, as it would be revoked should your spouse kick you to the curb. Since you are indeed an alien resident, you are subject to the tax laws for alien residents. If you were to leave the country prior to July, your tax rate would be 18%. If your employer only withheld 5%, aren’t they responsible for the difference, so just protecting themselves?
Nobody is forcing employers to withhold 18%. I know of employers who don’t. But I think they are on the hook for it if an employee doesn’t stay more than half-year.
Since the tax office said you should only be taxed 5% then tell your employer to contact the person you contacted in the tax office. Of course, tax witheld is not actual tax to be paid. You can always refund the difference. Having said that, I have never ever had my tax witheld by the companies I’ve worked for over the years, before and after I got my Taiwan ID.
Are you and your wife paying the tax separately or as one?
You should be classed as a resident. The tax office can sort it out for you, go to the local tax office in person and ask them to instruct the school for you, I have always had good results dealing with them.
"Everyone will be taxed from Jan. 1 2012. According to the tax office, within a tax year an 18% withholding tax rate will be applied to all foreigners (people who don’t have a Taiwanese ID) the first 183 days of your residence in Taiwan and 5% the rest of the tax year, and it doesn’t matter what kind of ARC you are holding. When you file taxes, you will either get your tax return or need to pay more depending on your income for the tax year.
The school will deduct 18% of your monthly income and give the money to the tax office around the 15th every month the first 183 days of your residence within the tax year.
The school will deduct 5% of your monthly income and give the money to the tax office around the 15th of every month after the first 183 days of your residence within the tax year. The tax rate will be varied if you have dependents.
For non-residents and non-government overseas officials, Starting from January 1st, 2011, for those with monthly salaries in full amount equal or lower than NT26,820 (1.5 times the monthly baseline salary assessed by the Executive Yuan), a 6% withholding rate is applied; for those above such amount, an 18% withholding rate is applied."
Or the school coordinator who handles the tax is ignorant. They are interpreting the tax law the wrong way. Let me quote “18% withholding tax rate will be applied to all foreigners (people who don’t have a Taiwanese ID) the first 183 days of your residence in Taiwan and 5% the rest of the tax year”.
This applies to foreigners during their FIRST 183 days in Taiwan. Since you have been living here for 5 years now, it doesn’t apply to you.
From what I know on this I side with the school. You’ll get the money back and they get to have all the i’s dotted and t’s crossed. Because when the taxman comes knocking, he will look for anything and they don’t give a shit what the other tax guy said. Why take the chance if you’re the school owner, you have enough headaches.
When the taxman comes, he will not be looking for the employee’s tax being withheld. He will be checking whether the school is paying their taxes and if they are paying it right. In the end, each individual is responsible for his own tax, whether the school withheld anything or not. I am working at one of the biggest IT company in Taiwan and they are not withholding any tax on my salary. I have worked before in a trading/manufacturing company as a foreign worker and they have not withheld any money for tax. Yes a school can have a policy of withholding tax but the amount withheld should be based on what the law says. When a school misinterprets that law, they can be held liable too, if the OP complains. As I have said, the best solution is to ask the school to talk to the tax man where the OP inquired.
Tax office says this is an issue between the employees and their employer. The 18% is NOT mandated by the government. It is merely a suggested rate to ensure the employees will remain for the 183 days of the tax year. The withholding rate is entirely negotiable.
So, my employer would like a way to protect themselves from the tax office should a foreigner split before the required 183 days of the tax year have been fulfilled.
Any bright ideas as to how to protect the employer from the tax office? Would a written affidavit absolving the employer from liability work? What would satisfy the tax office and the employer other than the 18%? Would I need a guarantor?
Let me reiterate again, your employer will not be liable for unpaid taxes of their employees. This would only be a problem for them if and when an employee complains that they did not remit the tax they have deducted from him. As the tax office said, there is no such mandate to deduct not only 18%, but with holding tax in general every month on wages. At the end of the day, it is still the individual who will be responsible for his taxes. An employers only duty is to give the tax payer the annual form showing the amount of tax with held.
Ok, so the employer doesn’t have to do it. The government will not seek to recover the taxes from the employer.
Then why on earth are they doing this?
The tax office recommended a rate of 18%-20% for 6 months. Our accountant is following the guidance from the tax office. I imagine our accountant is being lazy and doesn’t want to calculate different percentages or keep track of all this… but at this point in the battle I need to know what is motivating my employer.
AFAIK, your getting way over charged on deductions. Just stop by the tax office and explain what is happening. I think they will call the employer and fill them in on the correct rate. The employer can choose to ignore the call but at least you have a shot on educating them. Make sure you have the number for a decision maker instead of the little girl at the front desk.
Maowang, how much do you really like this job? Because your putting your employer in a bad situation in their view. The simple fact is the rule is normally construed that if you are employing a foreigner, then you must withhold 20% of their pay for their first 6 months of employment every year. Some places do it and others do not. Like all rules in Taiwan, it’s only important when you are under scrutiny which your general English school usually falls under. Your employer is motivated by their express desire to have as few potential problems in the future as possible. Problems with the tax office are probably one of the least wanted problems you want as a person.
I have two employers. One takes the 18%, the other doesn’t. I like it as a forced, reliable way to save money. Every year I get a nice check to invest into my retirement fund.
That would be fine… If I wasn’t supporting a family. I have two citizen dependents right now. Diapers alone get pretty pricy… if the washing machine died or the car had problems then I’d be in deep. Bills are monthly. If I have anything extra I usually put it in a mutual fund that I already have set aside. Now, I may have to sell funds.
Check out the fifth item:
五、問：所得稅法規定「中華民國境內居住之個人」與「非中華民國境內居住之個人」如何區分？
答：下列2種人是屬於「中華民國境內居住之個人」：
(一)在中華民國境內[color=#0000FF]有住所[/color]，並經常居住中華民國境內，無論於一課稅年度內居住有無滿183天者。
(二)在中華民國境內無住所，而於一課稅年度內在中華民國境內居留合計滿183天以上者。
不屬於以上所稱的個人，為「非中華民國境內居住之個人」。
(Translation:
Q: What is the difference between “residents of the Republic of China” and “non-residents of the Republic of China” regarding the Income Tax Act of the ROC?
A: The following two categories of individuals are regarded as “residents of the Republic of China”:
An individual who[color=#0000FF] has registered residence in the Household Registration Office and [/color]frequently stays in the ROC is regarded as a ROC resident, regardless whether his or her stay in the ROC is less than 183 days.
An individual who has no registered residence in the ROC but stays for 183 days or longer is regarded as a ROC resident.
Individuals not falling into the above-mentioned categories are regarded as “non-residents of the Republic of China”.)
Since you’re married and on your wife’s hukou you should be category 1.
I highlighted some text in blue that I missed on first reading of the Chinese version. I believe it’ll be key in convincing your boss.
Good luck, man. I’m sorry your employer’s being such a jerk about this.
And dasaint: I can’t find the relevant article right now, but having read through a lot of Taiwan’s taxation law a few years back, I’m positive there’s a section somewhere in there that requires employers to withhold income if their salary exceeds a certain amount. Certain types of wages are exempted. I believe your employer is in the wrong for giving you full payment of your salary and expecting you to pay all your taxes yourself.
If I only worked for the trading company on my previous job, I would have agreed that maybe it was just a special case. But I’m working now for one of the biggest IT company here in Taiwan, and they are not with holding any tax from my salary. Maybe because I am already a Taiwanese? I don’t know, but it would sound pretty strange if that’s the reason, wouldn’t it? It’s good financial sense to put to good use the money which would be otherwise with held to pay for your tax. If I’m earning NT$100K a month, 20% of that is NT$20K. Just putting that in a one year time deposit would earn me a lot already. Do that 12 times a year and that’s a lot of money already.
I am in a similar situation. I have had an APRC for about three years
School started taxing me 18% when previously I wasn’t taxed, since I’m a certified teacher.
I think my school is misinterpreting the definition of resident and non-resident. They told me that since I am a foreigner, I am a non-resident. Therefore I pay the full 18% for 183 days.
My school claims that if I were not taxed at the 18% rate, they would be responsible for paying the difference in taxes if I left the country early and never came back.
Is there any proof that employers are required to pay the difference in taxes if people leave the country before 183 days is up?