I came to Taiwan a month ago and have been looking into moving here as a tax resident. Most of my income is from investing in European stock markets, so I spent quite some time and effort studying this subject. I found a lot of interesting information on this forum from people with the same question, so I figured I’d share what I found with the community.
First of all, capital gains (that is from stock market investments) are in principle not taxed. It is not considered income so it doesn’t get taxed by income tax, and the capital gains tax introduced in 2012 was abolished in 2016.
However, it could be taxed under the AMT: that is you calculate all your income together, and if the sum is over 6.7 million NTD, then what’s over it does get taxed at 20%.
From this example it’s clear that if your capital gains + other income are more than 6.7 million NTD, you will have to pay taxes on the amount that exceeds that level, 20% or the regular tax levels, whichever is higher.
I’m revisiting this topic, it seems I made errors in my original study.
For one I misread the pwc document, it doesn’t actually mention capital gains in the AMT formula, it only mentions “The add-back items include overseas income exceeding NT$1 million in a tax year, proceeds from certain life insurance and annuity policies, income derived from transactions of privately-placed securities investment trust funds, and non- cash charitable donations claimed as itemised deductions.” So it seems like capital gains from securities are not put back in after being exempted from income tax.
The 2014 document does include it, but at this time capital gains were taxed in Taiwan, so maybe that is why.
Also there was an article last week (lost the link though) quoting the Taiwan tax department as saying they want to include non-publicly traded securities in the AMT calculation, because such constructions might be used to avoid real estate capital gains taxes, which are not exempted like securities trading. This suggests that at this time neither publicly and non-publicly traded securities are included in the AMT tax calculations.
A final issue is if investing can be considered as income in Taiwan. Most countries will tax it as such, depending on how many trades you make per day, or the amount of capital used, but for Taiwan I’ve never seen mention of any such rules.
If my new analysis is correct, then Taiwan is a paradise for stock market investors. And with the global pandemic in effect, the best place on earth right now to be. So I think I’ll give this another look, I’ve already been offered a very quick ARC option.
I would really check with an accountant. US broker will ask for your Taiwanese tax ID (arc number). And I think you need to report CG as part of AMT. With allowance, deductions etc, tax rate is reasonable, although I would not call it investor paradise.
There is often confusion with stock publicly traded in Taiwan and Taiwanese financial products that get special treatment.
Forgot to mention, whenever you transfer money to taiwan you need to explain the source and tax office is aware of it.
I assumed this was no long valid as the new tax on capital gains from securities trading was abolished in 2016, but then I found out that’s a whole different tax.
I got confused because older documents explicitly mention securities trading to be included in AMT calculations, but newer ones do not. I guess that’s because the tax on local securities trading got abolished (it was explicitly meant to boost the Taiwanese stock market), but foreign sourced trading is still included as foreign income.
From what I can tell, Taiwan does not tax capital gains on locally traded public/over the counter securities*, but anything traded outside of Taiwan can get taxed under AMT as foreign income.
Note * It was reported last week that capital gains from non-public shares and certificates trading will be taxed as income starting next year, because it seems people have been using those as a vehicle to avoid tax on real estate sales.
to the best of my knowledge no, the money is added to your income and you are taxed accordingly.
for example :
your annual salary : 1 million a year
your annual gains from selling stocks : 1 million
you are taxed on total income of 2 million
there are exemptions and deductions, but up to a certain amount you wont be taxed in Taiwan.
you might betaxed overseas.
I don’t understand why you say that there is 0% capital gains tax while also saying that you add the capital gains to your taxable income. If capital gains is treated as taxable income, it’s not tax free income
Also, do dividends need to be included as taxable income?
EDIT: Looks like they do.
By abolishing the partial imputation tax system on dividends, a new dividend tax regime was put into practice in 2018. Such regime allows resident taxpayers be able to choose either to incorporate dividend income into their consolidated income to calculate their tax based on progressive income tax rates, with a tax credit of 8.5% of the total dividend amount, with the credit ceiling set at NT$80,000 per household; or to opt for the single tax rate of 28% on dividend income computed separately from their consolidated income.
I believe there is no capital gains tax on stock owned abroad on foreign companies. Other types of world-wide (non-Taiwan) income (such as dividends) are not taxed until your cumulative income reaches the AMT (Alternative Minimum Tax). When you go above this cut-off, all your world-wide income is added up and you start to pay a tax on that.
Your quote seems to pertain to dividends (or other income) from stock owned in Taiwan of Taiwan operated companies. If you own stock abroad in foreign companies, then dividends are not taxed (unless you go over AMT).
And how many Taiwanese people actually pay this AMT in Taiwan? Very very few I reckon. What efforts do they go to check your overseas earnings and investments?
For legal entities, the AMT tax rate is 12% with a deduction of NTD 500,000.For individuals, the AMT tax rate is 20% with a deduction of NTD 6.7 million