Over the last two decades, Taiwan has undergone a number of tax reforms to enhance its competitiveness on the international investment stage and to promote trade and cross-border transactions.
In Taiwan, the highest government entity for tax administration is the Ministry of Finance. Taxation occurs at both local and national government level, with national taxes collected by National Taxation Bureaus and local taxes by the respective Tax Collection Offices in municipalities, counties or cities.
Starting a business in Taiwan? It is of fundamental importance for an employer to understand the tax obligations and taxation system where the business is. To help employers and HR leaders grasp the basics of taxation in Taiwan, Links has put together some essentials of what you need to know about Taiwan tax rates, different types of corporate tax and income tax.
Please note that this page serves as a general guide only, for more details on Taiwan’s taxation system, please visit official government websites:
Taxation Administration, Ministry of Finance, R.O.C.
Tax Obligations as an Employer in Taiwan
Pay-As-You-Go Withholding
Employers in Taiwan must withhold tax at the time of payment in accordance with the individual income tax rates. The withheld amount should then be filed and remit to the tax authority on behalf of the employee.
Taiwan’s Social Security Taxes
Newly established businesses are required to register for both employer and employee under the different social security schemes such as the National Health Insurance. Employers will withhold the premium payment payable by the employee directly from their salaries and remit on their behalf to the National Health Insurance Administration. For the latest contribution rates, please click here. In addition, there are several other schemes employers should be aware of, including the National Pension, Labor Insurance and Employment Insurance.
Are you a new employer in Taiwan? Check out this Guide to Taiwan Employment & Payrolling for more on employment contracts and payrolling.
Taiwan Corporate Income Tax
In Taiwan, corporate income tax is also known as the profit-seeking enterprise income tax. Any profit-seeking enterprise with its operation within Taiwan is subject to the tax, either at 0% or 20%, unless it is qualified for exemptions under the laws.
Worldwide income of enterprises headquartered in Taiwan is subject to this tax. However, if the enterprise has already paid any income tax on its foreign-generated tax at the source country, such foreign income tax can be credited against its Taiwan profit-seeking enterprise income tax. Should the enterprise be headquartered outside of Taiwan, only the income derived from Taiwan sources will be subject to the profit-seeking enterprise income tax.
Profit-seeking enterprises with a taxable income that exceeds TWD120,000 but not more than TWD500,000 are subject to annual adjustments at a tax rate of 18% for the taxable year 2018, a tax rate of 19% for the taxable year 2019 and a 20% rate for the taxable year 2020 and after.
Employees’ Income Tax in Taiwan
As an employer, it is important, and a responsibility, to understand and facilitate your employee’s tax obligations in addition to your own.
Individual taxpayers in Taiwan are divided into two categories: residents and non-residents.
Resident taxpayers:
- Individuals who have a domicile and is normally residing in Taiwan
- Individuals who reside in Taiwan for 183 days or more in one taxable year
Non-resident taxpayers:
- Individuals who are not qualified as residents
Taiwan’s individual income tax is levied based on a progressive tax rate system in which they are taxed at 5% to 40% of their taxable income.
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