So I started working in Taiwan 2 months ago and I’m trying to figure out if my school (public middle school in Taoyuan) is doing my tax correctly or if I’m being screwed in any way. I’ll describe what they told me and if it sounds right or fishy please let me know.
Basically they said as I started work in September, I will be taxed 18% for the rest of the year and I will not get any of that money back. I will also be taxed 18% next year until 183 days have elapsed (starting January 1) when my tax rate will go down to 5% for the rest of the year. I will have an opportunity to get some of that money back if I file my taxes the following May. This cycle apparently repeats year after year so it’s basically always 18% for the first half the year with me waiting to get some of that money back the following May.
Does this sound right?
Do other public schools do it differently?
She is wrong to tell you that you won’t get any of your money back, that is for the tax office to decide.
As you will be here less than 6 months this year, you are classed as a foreign tax resident. 18% is the correct rate for foreign residents. So, because they are choosing to withhold, this is the correct amount to withhold this year.
Next year is different.
Tax withholding is not a legal requirement in Taiwan. Your school is making the conscious decision to excessively withhold your salary to protect themselves on the off chance you leave Taiwan before you become a tax resident and leave the employer with your tax bill. It’s an overly cautious way of doing things but it’s not illegal. they will switch to 5% after 6 months which is the normal withholding amount for tax residents. If you plan on being here more than 6 months next year, then the school only withholding 5% won’t cause any issues.
From what I hear, it’s quite common.
In saying that, it is THEIR choice, if they tell you otherwise then they’re lying to you.
I have never had a single dollar of tax withheld by any employer in Taiwan. Not $1. This includes public schools, buxibans and some side gigs I’ve done. In May, I file my tax return for the previous year and pay my tax bill directly to the tax office.
If I was you, I would ask them to meet in the middle and only withhold 5% starting next year. Tell some porky pies and just say you have an offer at another school that is going to treat you like a regular person and either not withhold any tax or only withhold 5% and you will quit of they don’t meet your (totally reasonable) request. Or remind them that you’ve signed a x year contract and you plan on completing it which makes you a Taiwanese tax resident. Depends on how much it bothers you and your relationship with your employer.
Another option would be to ask them to switch to 0% withholding after 6 months because they excessively withheld during the first 6 months of the year
Basically if you are here less than 183 days as an ARC holder you are counted as a foreign tax resident
HOWEVER, their law states “people with a domicile in Taiwan only have to stay one month in a year”
Now the tax office has taken domicile to mean household registration… despite it being mentioned nowhere else in law… Meanwhile a person with household registration in say Taichung but living in Taipei would be considered DOMICILED in Taipei. (Due to working and having family based in Taipei…)
So in that reference… shouldn’t your address on your ARC be considered your domicile? (Especially if your family and work are in Taiwan) (therefore have the same requirement as Taiwanese) I wonder what could happen if you challenged the tax office in court?
The 183 day requirement should only apply to those on tourists visas or other non working temporary visas.
Not people with 1 year+ work permits and APRCs. Also the law is clear on “domicile” and doesn’t mention household registration.
I often wonder what would happen if we took organisations with discriminatory and potentially illegal practices to court but I’ve always found i can get what I want (am entitled too) after a heated argument/threats. Just wish i was met with a friendly face and the argument unnecessary
The term “person” as used in this Act refers to a natural person or juristic person. The term “individual” used in this Act means a natural person.
The term “individual residing in the Republic of China” refers to one of the following:
A person who has domicile within the territory of the Republic of China and resides at all times within the territory of the Republic of China;
A person who has no domicile within the territory of the Republic of China but resides within the territory of the Republic of China for a period of more than 183 days during a taxable year.
The term “individual not residing in the Republic of China” denotes an individual other than those as provided in the preceding paragraph. The term “taxpayer” as used in this Act means a person who is required under this Act to report or pay income tax.
The term “tax withholder” as used in this Act means a person who is required under this Act to withhold income tax from his payment to be made to a taxpayer.
Again. They take “domicile” to mean household registration… However, they change the definition when they want? i.e. someone with household registration in Taichung but working and living in Taipei would be considered “domiciled” in Taipei (not where their household registration is)
I think the Taiwanese government is genuine in it’s desire to retain immigrants but I also believe the government has no intention of treating immigrants as equals. Which is what it needs to do to retain immigrants. It’s a paradoxical mindset.
Out of curiosity, if you’re working, how does your employer withhold your tax?
My informal poll of the other Miaoli waiguoren I known of found that of 3 of us only 1 has tax withheld at 5% and it was his request, prior to that it was 0.
Me and the one other are also 0.
It’s bullshit and should be stopped. If you have residency here, job, family, health insurance etc… then you are DOMICILED! The 183 day requirement shouldn’t apply
yes you will. just do your own taxes. don’t sign any document from your school giving them the power to “get your tax return for you…cos it’s more convenient.”
That rule is normal amongst many jurisdictions to catch people out who are living in a country but not paying tax because they earn their income abroad and they claim no residence…
For example has a business in a low tax country but the owner is actually living in Taiwan. (On visa waivers or any other method)
You will notice Italy or Canada have similar rules.
If you leave Taiwan in March, they won’t consider you as having been a tax resident for that year. Thus imposing a much higher tax on you for those months
Also many workers get withheld income at much higher percentages for the first 6 months in a year.
Also the 183 day rule isn’t for residents… it is for tourists. (As per the “domicile” rule) -Domicile means place of living.
I stayed 608 days on a tourist visa, Covid tourist ruling that I could stay until safe to return home.
On my return I had to prove I had lived and received income from savings and not a business, in Taiwan or abroad.
Because of the 183 day rule.
