If I work in in Taiwan, for the first 183 days from Jan 1st … I pay tax at 20%. Then after this my tax gets reduced to a flat 6%.
I then can claim back this 14% in March the following year from the tax office. Is this correct ??
How about if I change jobs … Do I go back to 20% … and have to wait another 183 days or what ??
Or suppose I work roughly 160 days in Taiwan in a new company (after changing jobs) during the year … then when I go into the following year … I have to start all over again and pay tax at 20% for the 183 days of that year and loose all the overpayed tax for the previous year ?? Is that correct ??
I think this is the standard law … but because I changed jobs shouldn’t this be taken into account ?? Therefore shouldn’t I get a better tax break … and my tax back ??
The last time I checked, the tax forms that you fill out ask for number of days you were in the country per year regardless of how many employers you have or have not worked for. By that I mean, there are fields that ask for “date entered the country” from which date to which date, and you will need to refer to your entry/exit stamps in your passport to know. If you go there personally they most likely will also ask to see your passport. Hope this helps.
Regarding the liability for income tax in the ROC, the basic formula is explained in Article 7 of the “Income Tax Law”. Noteworthy is that ROC citizens and foreigners are treated exactly the same. However, in practice most accounting personnel in Taiwan routinely misinterpret the law, or otherwise apply it incorrectly, (thus resulting in ROC citizens and foreigners being treated in a different way). Also, the National Tax Administration has issued some inappropriate administrative orders over the years, and so the entire subject is quite confusing to most people.
After living in the ROC for over 183 days in any one fiscal year (Jan. 1st to Dec. 31st), your deduction should no longer be at the 20% rate. It should go down to 10%, or perhaps 6%.
However, the accounting personnel in any organization will often continue to deduct at the 20% rate. As a rationale they will say that you did not prove to them that you had exceeded the 183 days living in the ROC during the fiscal year.
Technically speaking, the law does not require you to submit such proof. However the previously mentioned administrative orders call for the foreigner to submit proof of this. (I bring this entire matter up because it is quite important — there is very much of a difference between the application of a “law” and application of an “administrative order”, and the latter can be fairly easily challenged in the tax courts for example.)
After you have that status of “resident” in any one fiscal year, you may carry that status over into the first half of the next year. If the accounting people where you work do not understand that, they should call the National Tax Administration (NTA).
Notes: (1) The NTA wants you to pay tax on money earned. They do not care if you have a work permit. No doubt this is primarily due to the fact that the income tax laws in the ROC predate the work permit laws by about sixty years. (2) The meaning of the term “resident” in the income tax laws is not the same as the meaning of the term “resident” in the ROC immigration laws. (3) A possible shortcut for a foreigner on a short term visa to apply for a resident visa is mentioned in this Forum under the “Termination of ARC” topic.