I have searched the forum for info about this topic but I would like some advice.
In my previous job I was earning $60,000 per month and my boss was deducting 6% from my salary each month for tax ($3600 per month).
However, I have now got the school’s tax statements and found out they were under reporting my income as approx $18,000, and paid 6% tax on this fake amount.
That means, my boss has been pocketing the difference (about $2500) per month. Is this normal practice in Taiwan? Am I not right to feel cheated?
My issue now is a moral one. Should I go to the school and demand this money back? I have all the “incriminating” evidence against them and could easily report them to the relevant authority.
The school did treat me well, but I sure hate the feeling of being conned.
Yeah, the boss cheated you. Of course, he/she will never admit it. Unfortunately, that is one of the oldest tax tricks in the books here. If you were working 100% legally, and you have proof of the school’s shady operations, you can threaten to go to the tax office and report them. Many schools will laugh at you because they think you won’t do it or they think you don’t know how to do it. If you don’t work there any more, or don’t mind losing your job, you can speak to the owner and demand your money back. That very same thing happened to me at the first school I worked at in Chiayi. The crap owner just chuckled until I informed him that I would be telling all the other teachers as well.
Did you look at individual monthly statements or a full year cumulative statement? Did they report your income as 18,000 or underreport by 18,000 (reporting 42K)? I thought the minimum amount a teacher could earn was 33ish K/mo to maintain a work permit.
Which tax year is this for? They should have been deducting 18% for the first 6 months.
Despite the questions you are likely getting screwed. First step would be to meet with the owner. If that doesn’t go well then meet with the authorities.
That’s only if you want to lose your job. If you want to keep your job, keep your mouth shut. However, still keep a dossier of all that goes on and especially keep paper copies of emails, statements, tax receipts, etc. always good to have a nice piece of leverage.
If you want to keep your job but don’t want your boss to continue pocketing your tax money, couldn’t you ask to pay taxes by yourself, once a year, and not have them deducted every month from your salary? I’m not sure how things work for schools, but at my job I do that. At least I’m sure I’m not getting ripped off some way or another.
Then again, if they they start declaring 60,000 a month and you do this, you could end in a higher tax bracket (12% I think).
Evading taxes by underreporting seems to be a cultural trait here. Down the road, when you try to apply for an APRC you will run into problems. Firstly, with a meagre salary of 18,000 a month you don’t qualify to begin with. If then you suddenly decide to tell the truth about your earnings you will not only need to pay back all taxes not paid, but also might have a meeting with the prosecutor.
Employers like yours are sadly all too typical. He saves a few hundred NT$ per month on his share of your health insurance and doesn’t care about the risks involved for you.
I would collect evidence, make copies of the evidence and summon the boss for a meeting. You can offer him to not report him if he agrees to properly report all your earnings from now on. If his reaction makes you think he will still not report your earnings in full, do report him and find a new job.
Well fortunately I’ve already finished this job, so getting fired isn’t an issue.
[quote=“Abacus”]Did you look at individual monthly statements or a full year cumulative statement? Did they report your income as 18,000 or underreport by 18,000 (reporting 42K)? I thought the minimum amount a teacher could earn was 33ish K/mo to maintain a work permit.
Which tax year is this for? They should have been deducting 18% for the first 6 months.
[/quote]
They have shown me only the monthly statements.
My situation is actually more complicated, because I’ve accepted a new job that I’ll start next month, but the government apparently won’t give me a new work permit until I provide a document called 完稅證明 (proof of tax payment) from my last job. Is it normal for them to ask for this when changing jobs? I’ve asked my old school for this document and they will “ask the accountant”. So I will wait and see.
The stated income was approx 18,000 and this is for the year 2013. I arrived in 2012 but they didn’t deduct tax for the first few months. I think there’s a rule about the first $76,000 (or x amount) earned being untaxed (can anyone verify?) or perhaps it was all just off the books.
I’m still considering what to do next. I need this “proof of tax payment” document in order to get a new work permit, so I need to play nice for now. Then I could perhaps approach them and try and get that tax money back.
In 2012 they should have deducted 18% because you were here for less than 183 days. The first 150-200K is tax free (standard deductions) but that only applies if you have lived in Taiwan for 183 days during the tax year. That is definitely not the case for you.
I don’t know how you can have a work permit if they are only claiming that you earned 18K/mo. You must have 14 hrs/wk (56ish hrs/mo) to get a work permit and that means that they are saying your hourly pay is 300ish/hr. I think there is also a general req’t that a foreigner (at least a teacher) must earn 32-33K/mo to be on a work permit.
Schools are also basically req’d to deduct 18% from foreigners for the first six months of every year.
You might be in a heap of trouble getting a new work permit. Every time you apply for a new work permit (at least for me) I have sent a copy of my previous year’s tax statement even when I have stayed at the same school. Getting this is something that you can do and I’m not sure if your school can do it. All you need to do is go down to the tax office (a specific one in your area that processes tax returns for foreigners) and ask for the proof of tax payment. It sounds like your situation is completely messed up and this could be an issue.
Your first step should be to get this document at the tax office. You don’t have to mention any of this dirt that you have but just act like an oblivious foreigner if something bad pops up when they process the document (done while you wait). And then say that you will contact the school to figure out what is going on.
I remember my first tax filing in Taiwan. I didn’t have the withholding documents that the school provides you (like a W-2 for Americans) and wasn’t interested in going back to the school even though I left on favorable terms. I put it off forever until I landed a new job and the boss asked for this tax statement. I went down there thinking it would be a painstaking process (filing in the US is) and instead they pulled the tax info up in 5 minutes and a separate desk filed my taxes (for me) in 5 minutes. There are many complaints that a person could have about Taiwan but filing taxes is a breeze.
That’s great advice. Simply go to the tax office, show them your ARC, and ask them to print out your tax statement. You don’t need your previous school to do anything. It only takes a few minutes. Above all, feign innocence and repeatedly say, “I don’t know” with a helpless look on your face. I’m not joking.
Thanks for your advice guys. I went to the tax office today and they said I need to file my taxes for 2012. I did it there and it was easy and fast.
They asked a few questions about why the salary was so low but I just played dumb (as suggested!). Eventually they gave me my tax receipt and tax statement for 2012. The total was not taxable, because it was so low I guess.
Now the moral situation here is a bit murky because in fact my old boss did not deduct any tax from me for the 6 months I worked in 2012 (I don’t know why, he could have scammed me if he wanted to!). So it would appear I’ve “saved” some money…
He did deduct tax in 2013 for 6 months but pocketed most of it for himself.
Well I’m not sure what to make of this! Maybe just let it slide and get on with my new job.
I think you just move on. It’s possible if you go down this road that you could end up owing tax on the real amount of your income. That could be substantially more than your boss pocketed.
correction - if you went this route then it’s likely that any money you got from the school would probably have to be paid to the tax office. Possibly more since the school wasn’t deducting for 6 months. And it’s going to be really messy to get anywhere. Not worth the trouble imo.
Simply go to the tax office, show them your ARC, and ask them to print out your tax statement. You don’t need your previous school to do anything. It only takes a few minutes. Above all, feign innocence and repeatedly say, “I don’t know” with a helpless look on your face. I’m not joking.