The Ministry of Finance in Taiwan is making significant strides in tax law reform, with five major amendments on the horizon. Among these, the revision of the Income Tax Law stands out as a focal point, drawing considerable attention.
Previously, withholding responsibility lay with the individual in charge of a company; however, under the new proposal, the onus shifts to the company itself. This adjustment aims to align withholding regulations more closely with corporate duties and responsibilities.
Another significant proposal aims to provide non-residents with greater flexibility regarding withholding time limits. Under the current regulations, non-residents often face challenges in adhering to the different deadlines as domestic residents. Many foreigners may be non-residents, so when it comes to withholding, they are often unable to take advantage of the preferential provisions for residents (domestic nationals).
To address this, the proposed amendment grants non-residents an extension of up to five days for withholding tax payment, voucher declaration, and issuance deadlines. This extension will be applicable if there are three or more consecutive national holidays, easing the withholding process for non-residents and bringing their treatment more in line with that of residents.
It's worth noting that while these amendments have yet to be passed, they are expected to be enacted in the near future, pending approval.
For non-residents, especially those staying in Taiwan for less than 91 days in a taxable year, several important tax rates apply:
Salary withholding tax rate: 18% For monthly salaries equal to or lower than one and a half times of the monthly baseline salary, the withholding tax rate is 6%.
Dividend distributed by a company, profit distributed by a cooperative, earnings payable by a profit-seeking enterprise organized as a partnership to its partners each year, or earnings from a profit-seeking enterprise organized as a sole proprietorship: 21%
Commissions, rentals, royalties, professional practice remuneration: 20%
Retirement payments or pensions (after exemptions): 18%
Reward for information or accusation: 20%
For further details on your resident status and taxation rules, please refer to our previous posts or visit the Ministry of Finance website for the up-to-date information.
By staying informed about these proposed amendments and their potential implications, taxpayers can better prepare for changes in Taiwan's tax landscape.
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