Tax & The 183 Days Clause


#1

I am wondering if anybody has come across the answer to: if you arrived in Taiwan after July2, do you have to pay 20% tax into the new year? You need to pay 20% tax for 183 days within a tax year. I started working here September 2. I was charged 20% tax for Sept, Oct. Nov. Dec, Jan, Feb. That period is 183 days, or six months. What I am wondering is: this period overlaps to tax years. So really I have only paid 20% for 4 months in 2001 and 2 months in 2002. My employers dropped me down to 6% on April. But as tax law is concerned, could the gov’t come back to me and say I need to make up 4 more months of 20% taxation in 2002, because there are only two months documented? Thanks for your comments!


#2

“Resident status” (according to the Taiwan Income Tax Law, Article 7) It is calculated based on your physical presence of 183 accumulative days within a fiscal year of January 1st to December 31st.

Your employer is taking the liberty of using this “resident status” to calculate your taxes this year. If indeed, you do live in Taiwan for over 183 days this year, then there is little problem. If you leave before the 183 day figure is reached, and have someone file your taxes (in May of 2003), then you will be calculated at the “non-resident rate”, and will no doubt have some taxes to make up.