Hi, I’ve been teaching in Taiwan since October 2020 and I plan to stay for at least a year longer. So far, I’ve been taxed at a rate of 18%. Correct me if I’m wrong but I’ve heard that after 6 months (so after April) my tax will drop down to 5%. I’ve also heard that this difference (18% - 5%) can then be refunded.
What’s the refund procedure and is there a deadline?
Also what documents are needed?
Thanks.
You’ll get it back when you go to do your taxes in May.
no. It’s after 6 months for every year from January to December. So, the tax rate for your last year income is 18%. If you will be here for more that 6 months this year, 5 % on your whole income this year. The difference will be refunded next year May.
The tax rate drops if you’ve been in the country 183 days or more of each tax year which runs Jan.-Dec.
If your employer has withheld at a higher rate, eg. 18%, you will be refunded the difference when you file your tax return the following year.
(Edited to correct)
Thanks for the quick responses.
Ok, so it’s the first 6 months of EVERY year that are taxed at 18% then the last 6 are at 5%. Thanks for the clarification!
So if I actually checked my payslips properly from Oct to Dec 2020 they should be taxed at 5% not 18% right?
Another question. So in May of 2021 I will have to ‘do’ my taxes (for 2020), even though I’m employed? Just asking because where I’m from if you’re employed your employer and the tax agency will do everything for you automatically, refunds included.
it’s the first 6 months of your stay for every year. So, if you were here for more than 6 months in 2020, your tax rate is 5%, but if your employer didn’t know it and thought the October was your first month, 18% might have been deducted. It will be refunded the coming May.
Yes, you usually do it by yourself.
Your first six months. Not the first six months. The months you worked last year are gone baby gone since you weren’t in country long enough to escape the 18% bracket.
Edit, what tando said. I’m presuming you weren’t here before July of last year.
Ok so it’s more complicated.
I originally came in Nov 2019 via visa-exemption. I flew out and back in end of Feb 2020 to get another 3 months, which then got extended due to COVID-19. Since then I’ve not left Taiwan so that’s the start date I guess. I got my ARC and started working in Oct 2020.
Given end of Feb 2020 was my most recent entry to the country, that’s essentially when my tax year starts right?
So my tax year is this:
Mar - 18%
Apr - 18%
May - 18%
Jun - 18%
Jul - 18%
Aug - 18%
Sept - 5%
Oct - 5%
Nov - 5%
Dec - 5%
Jan - 5%
Feb - 5%
For every year until I leave.
Is that correct?
I just checked my payslips from Oct 2020 to Feb 2021 and I’ve been taxed at 6% for all 5 of them which is in line with the above schedule. I’ll see if my March payslip gets taxed at 18%.
Side note: I wonder why I was taxed at 6% not 5%, I should ask my school.
That’s not how this works in Taiwan.
If you clear 183 days in Taiwan in a calendar year (day of arrival doesn’t count; day of departure does count), you can escape the dreaded 18% flat tax with no deductions permitted.
After filing your tax return in May for the previous calendar year, if you are in line for a refund (i.e. more taxes have been withheld at source than what you owe), a refund will be provided on August 1. At least that has been my experience!
Guy
You should use correct terms.
Your tax is not 5% or 18%. Your tax “withholding” is either 18% or lower which can be adjusted by your employer.
Your tax “liability” at end of every year will be based on all taxable income, domestic and foreign based on tax law, citizenship etc.
Your tax rate will be based on the above income. It could be 12%, 18%, 20% etc. Finally if your total withholding was more than the tax liability, you’d get a refund when you file your returns.
Am I correct that such refunds (if applicable) are provided on August 1? I’m curious to know if there have been any changes lately.
Guy
Tax year is from January to December for everyone.
Your tax was withheld as you were a tax non resident. It is 18% or 6% for wage more or less than 1.5 times minimum wage, ~35k NTD.
It sound you were a tax resident last year, so the 1% difference may be refunded this May.
No matter how much your boss withholds, it will all work out in the end.
My wife’s school still withholds 18%, even though she has been working there for over 2 years. It’s really annoying (we tried to argue with them but to no avail) but we always get refunded the exact amount so that we end up paying 5%.
I would be annoyed that we’re losing interest… Except that interest rates in Taiwan are pretty much non-existent.
So, just hang tight and It’ll work out :).
You have received a tax refund in May? This has never happened in my case…
Guy
I didn’t remember when it was actually refunded.
Fyi in Chinese
直撥退稅日程公告
https://www.ntbt.gov.tw/multiplehtml/66903224d24545219c8fabc05e33316a
Here’s what I think I know:
The employer may, at their discretion, withhold tax at 5% all year. They usually establish the 18% withholding rate for the first 183 days of your employment because at the beginning of the year they are liable for the foreign employees tax for the year. Their risk is mitigated this way.
In May, take your tax statement for the previous year - supplied by your employer - into the governmental tax office. They’ll take it from there and either refund or charge more.
Yes?