I have a work based ARC here. If I start working for an overseas company on a contract basis, should the income coming from overseas be declared? Keep in mind that the amount will be deposited to my Taiwanese account.
I just called the NIA and contrary to what’s mentioned here, I was told that the income needs to be declared - The proof being the business contract + my passbook copy indicated the money wired.
Anyone who could help me on this? Thx
Most countries’ taxes (including Taiwan’s I’m fairly certain), are based on what country the work was physically completed in – not about where who is paying you is located.
This is doubly so since you’re wiring it to your Taiwanese bank (so the Taiwan government knows that you are getting money from somewhere [you’d still legally be responsible for paying taxes on it even if it was wired to non-Taiwan bank, but they would have no way of knowing about it]).
I’ve heard good things about the tax office here – I’d think you could just head on down there and they could help you out with what you need to pay.
Unless there’s a nexus to Taiwan (ie, you are working as a manager of a Taiwan branch office), you can have an exclusion of ~6 million NTD of overseas income. If you want to play it super-safe, self-incorporate and receive this as dividends.
Really do not trust everything you read on forum and either ask the tax office or a CPA.
There are also instructions heres:
An individual who stays in the R.O.C. for 183 days or longer within a taxable year is regarded as a resident, and the individual income tax shall be declared and assessed by a progressive rate (see Article 15) on the amount of his/her net consolidated income (taxable income) which shall be the annual gross consolidated income (including the various incomes derived within the R.O.C. and the remunerations derived outside the R.O.C. for services rendered in the R.O.C.) minus the exemptions, deductions, and basic living expense difference.
Note that this applies to dividends, but not salary income.
Dividends of a legitimate oversea business, not dividends of a single person company you would have setup only to avoid tax.
How does this get differentiated from a tax audit perspective? I only say this as someone who is a small business owner, and one that really only has myself and my wife running it.
As can be seen in other posts, we are currently trying to navigate the tax system in relation to our business (Canada and Taiwan). It is not as clear cut as everyone makes it seem in relation to “salary” vs. “dividends”. This only really works with larger companies, and I have yet to receive a definitive answer in relation to companies that have a profit of under $50K US a year.
Maybe I just don’t understand the options available for opening a business as a future resident (Gold Card) with open work rights. I want to have a better handle on this before we move, in that it is likely what we will be focusing our work life around. We don’t need to make a ton of money, in that I will have a modest pension ($50-60K NT/month), but something that allows us some trips and spending money, etc., while having a personal business that we enjoy.
I would check with a CPA, but there are the usual sole proprietor, partnership etc… in the law to avoid tax loopholes.
Keep in mind when you ask people that a lot of business owner over here don’t mind breaking the law.
I plan to talk with a Taiwan based CPA when things get closer. I just need to figure out a cost threshold for setup of a business, etc… We are not a big business, so anything over $10K NT for setup is a lot (especially considering we won’t need work visas or anything). However, if we have to eat costs for the first year or so, then we may not have a choice.
As well, I do our books in Canada, in that there isn’t much to cover really, just sales versus costs and what is a claimable deduction for taxes. So personally I think an ongoing retainer for a CPA to do our books in Taiwan is a waste. However, it may be necessary for the first year or two, until I can get a grasp of what is required to file taxes as a business in Taiwan.
Btw, you might not even need to open a company in Taiwan. There is a freelance status. Not sure what it cover exactly, hard to find the detail. In that case just get a CPA to do your income tax once a year (or just go to tax office, see if they are able fill the tax form for you for this case).
Is that right? I remember reading in some thread that the limit for freelance income before you should (must?) register is fairly low (ca. 30k a month, although I also don’t remember exactly).
Not my experience, but I’ve never seen an actual text that describes exactly how it works.
I have a foreign employer and they give me a letter stating my annual income that I bring to the tax office and we pay taxes off of that (very low and employer reimburses us). I know of others who just don’t declare this at all.
How exactly would a „freelance registration“ work? Does that mean establishing a sole proprietorship (which seems to be kinda complicated in Taiwan?)? Or is it much simpler?
Good question. I’m not sure either (which is why I haven’t done it yet…) - it’s just what I was told by more experienced forum members in other posts, such as here. (I also see that you’ve also been looking into this situation.)
I imagine that it means telling the tax office that you’re doing freelance work somehow (not so unusual I think - I remember having to do that in Germany ages ago). I got the impression from earlier reading that it wasn’t quite as complex as opening a company, just registering yourself as having self-employment income…but again, I don’t really know.
I’ve been intending to go to the tax office for their free consultation thing to ask them what one needs to do in this situation, but haven’t gotten around to it yet. Worst case scenario is that I would just report the income next year, see what happens, and hope I’m not in too much trouble. I’m also thinking about starting a company at some point, just didn’t get the chance to look into the best approach yet.
Let us know how this goes.
If you don’t intend to be in Taiwan long term, don’t bother with taxes. You’ll need a paper trail if you want to apply for an ARC, but if this is a six-month stint nobody is going to care.
Many people on this forum get rock hard about fulfilling their personal tax obligations, but defend their land lord not claiming taxes on the income from their property so they can get a 5-10% discount on the rent. I call this Sanchong Syndrome.
Nice. What other symptoms does this syndrome have?
In my case, I might actually want to stay a bit longer. Or at least not be forced to leave because I was too cheap to pay taxes. In addition, if I don’t pay taxes in Taiwan, my home country might start taxing me because I can’t prove that my income has been taxed in another country. Which would mean paying twice the amount of taxes because of higher rates (not including potential penalties)…
So call my crazy for actually wanting to follow the law, but in this case I think it’s in my own best interest. And I guess for others there might be similar motivations just beyond pure morale reasons.
So really hope someone knows how to do it “right” without having to incorporate…
I get all my income overseas as well, you need to provide the following
A) bank statement showing the income
B) invoice for said income
C) contract if the income is new source(my contracts are in English, my wife had to translate it)
I have to do the following every 2 months, I send them to my cpa who declares it
Note, the income is actually coming to my Taiwan company(not me personally) so it might not be exactly as above for you.
But, you might want to incorporate as you can deduct a lot of expenses(travel, computers, dinners, etc)