This article is a deep dive into the types of Taiwan tax that impact individuals with higher net worth, or those with deeper ties to Taiwan. It is the second in a series of articles we are publishing that serve as a comprehensive guide to navigating your Taiwan taxes as an expat living abroad in Taiwan. Our first article is a handy field manual to the fundamentals of Taiwan income tax for foreigners. If you need to brush up on the basics, please have a look at that story as well.
Once you’ve cleared the early hurdles of managing your personal income tax in Taiwan and mastered the basics of Taiwan tax regulations, a time may come when you need to tackle more complex tax issues, particularly those relating to property, inheritance, estate taxes and gifts. Dealing with these types of taxes can be more complex, and intimidating, than simply filing your basic income tax each year. If you’ve built your life or your wealth in Taiwan, have a Taiwanese spouse or family members, or own property in Taiwan, there you’ll need to understand how to navigate these types of taxes and incorporate them into your long-term wealth planning and financial strategies.
Regardless of your situation, knowledge is power, and the more you know about these issues up front, the more prepared you’ll be to deal with them when the need arises. We hope you find this article to be a useful guide, but we also understand just how complex and opaque the rules can be – especially in a foreign country. We strongly advise you to seek professional guidance when dealing with any of these types of issues to ensure that you are in compliance with local tax regulations, and to prevent you from leaving any unnecessary money on the table!
In the several articles, we will cover:
Preferential Tax Treatment for Foreign Special Professionals
Taiwan’s Estate and Gift Tax Regulations
Please note that in some sections below we include information relevant to Taiwan citizens as well as expats; this is because many expats may have Taiwanese spouses or family members, and will need to take these rules into consideration, especially when dealing with estate and gift taxes.
Preferential Tax Treatment for Foreign Special Professionals
Since 2018, Taiwan has offered tax incentives to foreign professionals who have obtained the “Employment Gold Card” or the “Foreign Special Professional Work Permit” and who have been approved to work and reside in Taiwan. If you have either of these types of work visa, and you meet the following criteria, you are eligible for significant tax reductions for your first five years in Taiwan:
You stay in Taiwan for more than 183 days in a calendar year
Your Taiwan-sourced income exceeds TWD 3 million
This is the first time you have obtained a Taiwan work permit
You maintain your work permit status
If you meet the above criteria, 50% of your income above the first TWD 3 million will be exempt from tax, and your non-Taiwan-sourced income is excluded from your income basic tax (IBT) calculation. Furthermore, certain benefits offered by your employer, which are normally considered taxable income, may be exempt. Please consult a tax professional to determine exactly which exemptions apply to you, as the rules regarding benefits are complex and may change over time.
More information about the Act for the Recruitment and Employment of Foreign Professionals can be found here.
Capital Gains Tax and Taxes on Dividends
In Taiwan, most capital gains taxes derived from sales of securities or futures are exempt from personal income tax. However, since 2021, any gain derived from the disposal of shares in non-listed or non-OTC companies is considered taxable income. (OTC means over-the-counter, i.e. major listed stocks, bonds, or securities purchased and sold through a broker)
The exception to the above rule is gains from investment in high-risk, innovative Taiwan startups no more than 5 years old. Any gains from disposed shares in these types of companies may be exempt from your taxable income.
For information on capital gains related to property transactions, refer to the “Property Tax” section below.
Dividends
For dividend income received from Taiwan companies, you are able to choose from two options for calculating the relevant tax owed:
The dividend income is included in the calculation of personal income tax and subject to the relevant progressive tax rates, with 8.5% of the dividend income available as tax credit, capped at TWD, 80,000
Dividends are separately taxed at a flat rate of 28%
For residents: Dividends from foreign companies received by resident individuals may be subject to AMT at a rate of 20%, depending on your situation.
Non-residents: dividends received from Taiwan companies are subject to a 21% withholding tax.
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