My Employer's Tax Blunders

Legal Taxes
1

Here’s the situation.

I worked legally in Taiwan 3 years ago for a period of one year. I left for 2 years and just recently returned and acquired a different legal job.

The first time I was here I was in the high tax bracket for 6 months, then moved to the lower one. This time around there was some question as to whether I would have to restart in the high tax bracket or if my first stay entitled me to stay in the lower bracket, even 2 years later. Well, my employer gave me the benefit of the doubt, and is only taking 6% out, which is in my favor. But the more I research it the more I think I think I should be in the higher tax bracket this time around as well.

Will I be in trouble once tax time comes around if my employer wasn’t deducting the full amount he was supposed to?

2

INCOME WITHHOLDING:
Local citizens or foreigners who have been in the ROC for less than 183 days in one year (January 1st to December 31st) should have withholding done at the maximum rate of 20%. This is the so-called non-resident tax rate.

Local citizens or foreigners who have been in the ROC for more than 183 days in one year should have withholding done at a lower rate. This is often 10%, sometimes 6%, (and may depend on how well you can negotiate with your employer). This is the so-called resident tax rate.

If a local citizen or foreigner qualified for the resident tax rate during one year (January 1st to December 31st), then he/she may continue to enjoy that preferential rate into the first half of the following year.

The above three rules are the most important rules that apply. Hence, your status as of your last soujourn in Taiwan, two years or more ago, is not really of any reference value.

INCOME TAX FILING:
Income taxes should be filed by the end of March each year, for the previous year’s earnings. After calculating your taxes, if you have a balance due, you should pay it. If you are entitled to a refund, you should make note on your form of what bank account you want the Tax Department to remit that NT$ amount to, or what method of receiving that refund you consider most desirable.

TROUBLE?
If you calculate the amount of income tax that you owe for the year, and you file your return on time, you will not be in trouble regardless of whether your employer overdeducted or underdeducted.

If the Tax Department really wanted to follow up on this whole matter of “determining the correct percentage for withholding taxes”, it would be expected that they would issue the relevant explanatory clarifications to all the employers in the ROC. However, all the tax reguations are available on the internet and at all local tax offices. The tax offices also welcome telephone inquiries, so there is really no need for the tax officials to make any further pronouncements on this subject.

EXPERTISE OF ACCOUNTING PERSONNEL
If the accounting personnel in your organization are unaware of the correct procedures, it can only be attributed to their own ignorance.

[Note: This message has been edited by Hartzell]