I wanted to buy a mutual fund in my TW bank, the lady at the bank advised me against it and told me that as a foreigner I will have to pay a 20% tax on my investment. I never of this before and perhaps we had a language barrier problem, can someone shed some light on the issue? if a foreigner wants to open an investment account in TW, are there any special/extra limitations to know about?
I wouldn’t recommend you do this anyway. Their fees are so high you are guaranteed to lose even in a bull market. The S.O. showed me her non-performing funds. Absolutely disgraceful, when you check the underlying stock performance. Just open a US-based trading account and buy ETFs.
Are you sure that the 20% tax on the investment doesn’t mean that the bank would automatically withhold 20% tax on whatever profits when you sell? This is commonly done on any income earned by foreigners although some buxibans don’t. When you file your taxes you would be due a nice refund.
This may be a dumb question, but could you explain what this means and how to do this? Do we need to be American citizens?
Well, I opened my trading account years ago so it might be different now - but at the time it basically involved filling in an online application and mailing a copy of your ID. I use ameritrade.com, although of course I’m not necessarily endorsing their service.
It’s actually better to not be a US citizen, because that means you’re automatically exempt from US taxes. You do have to fill in the occasional form for the US revenue service, but it’s not difficult or complicated. It’s possible if you make a shitload of profit that you’ll pay taxes (capital gains?) when you remove your money into a non-US bank account, but (unfortunately) I’ve never had that problem so far.
ETFs are exchange-traded funds, which means they are bought and sold as if they were shares in an ordinary public company, but in fact they represent multiple companies bundled together by brokerages. They’re typically index-trackers. Obviously, there are still fees attached, but they’re more-or-less negligible compared to traditional managed funds.
btw Abacus is almost certainly right about the 20% - it’s a withholding tax that will be refunded if you remain resident in Taiwan long enough.
Well, I opened my trading account years ago so it might be different now - but at the time it basically involved filling in an online application and mailing a copy of your ID. I use ameritrade.com, although of course I’m not necessarily endorsing their service.
…
ETFs are exchange-traded funds, which means they are bought and sold as if they were shares in an ordinary public company, but in fact they represent multiple companies bundled together by brokerages. They’re typically index-trackers. Obviously, there are still fees attached, but they’re more-or-less negligible compared to traditional managed funds.[/quote]
Thanks - I need to look into this. I shut down what investments I had a few years ago in a combination of apartment down payments and sorting myself out for non-residency in Canada (actually, that was really well timed, since I sold everything a few months before the crash in 2008!); my wife and I have got a few things in Taiwan, but I need to get back into other funds as well - i.e. investments that inflation won’t necessarily totally screw up. And indexed funds are what I probably want.
How long do you have to be in TW to get a refund? I am a student, I haven’t filed any tax declarations as i do not work. Does that mean that I will pay the 20% tax?
You have to be in Taiwan for 180 (or 185) days during the tax year (that you sell). Because you don’t work then the entire amount would be refunded to you but you would need to file taxes.
Thanks!
is there a specific time the government asks to file returns? How long does it take to get the money back?
the thing is that 185 days end in July, and I plan to leave in August, so I am not sure if its worth it to open an investment account with such a short time.
no, it’s not worth it to open an investment account with that short of a time frame.
To answer your question though is that you normally file taxes the following year and it take FOREVER to get your return. However I think it’s possible to file early and get your refund after jumping through several hoops.
Usually I file on the deadline (end of May? end of April? I can never remember the date!), and then get a refund in to my bank account in August, or perhaps September.
If you’re trying to get your refund from overseas, mind you, who knows.