I won a prize recently (less than 10k TWD), and they told me that foreigners (including those with residence permits) must pay 20% tax on the prize in order to receive it. According to them, it’s what their accountant told them. I asked for the law that says this, but they didn’t know. Should I push back or is there an actual law or accounting reason where they can’t claim tax deduction?
it is that everyone must pay 20% tax on the prize
Article 2 of Standards of Withholding Rates for Various Incomes
- For prizes or payment from contests and games won by chance, 10% of the full payment is withheld. However, for prizes won in a lottery held under government auspices, where the prize for each ticket (raffle, bet) does not exceed NT$5,000, shall be exempted from tax being withheld. Where the prize for each ticket (raffle, bet) exceeds NT$5,000, 20% of the full payment will be withheld.
Hmm how does withholding work if it’s not cash? For example if you win a new piece of furniture, and you say it’s worth $9000, do you then need to ask the prize winner to pay $2250? Or if prize winner doesn’t pay, does that mean you as the prize giver need to pay $2250 in tax?
Although @tando is right, If they are singling out foreigners, i’d be livid.
Some people have to reject non-cash prizes because they can’t afford to pay the tax.
I will ask why they are singling out foreigners, maybe they are willing to pay out of pocket for locals to attract business or keep a good reputation or something
Was this prize a bonus from your company?
My previous employer did something similar arguing that they couldn’t put together with my incoming for tax declaration.
Interesting, they only did that with foreigners…
This is normal. It happened to me in an office raffle in Taiwan when I won an iPad I didn’t even want and they deducted the tax from my pay, but it also happened to me at an office in the UK. My understanding is that if they’re going by the books, then they have to deduct the tax, although not all companies will be so anal about it. It has nothing to do with being a foreigner.