Job Discussion Forums

[atiff]

Dear all,

Recently we have received notification from the Ministry of Finance of changes to the tax laws for foreigners in Taiwan. As this will affect everyone regardless of company, I thought it best to share what information I currently have. Once I have the final details I will post some more information about this (unless someone else beats me to it).

At this stage, the information I have is that the withholding tax rates for foreigners who are tax residents in Taiwan (ie, have been in Taiwan at least 183 days in a calendar year) are going to drop from 10% to 6%, effective April 1st.



EDIT by atiff: Deleted information of two paragraphs here as it was not 100% accurate - see second post, below, for the accurate information



Obviously, this will affect almost everyone teaching here, so I would encourage you to check with your employers and see how these changes are going to affect you.

Regards,
Andrew Tiffany
Manager, English Human Resources, Hess Educational Organization

[atiff]

As promised, some updated information. Someone PM'd me to ask if my information was correct, for which I'd like to thank them. What follows is the official advice I have received and I believe it to be 100% accurate at this time of writing. (This is a copy of information sent out to all our branches and teachers)

I hope this is useful.

Cheers
Andrew Tiffany
Manager, English Human Resources, Hess Educational Organization


There has been a modification of the �The Standards of Withholding Rates for Various Incomes� regulations of the Taiwan Ministry for Finance, dated March 5, 2008

For all teachers who are tax residents of Taiwan (i.e., have been in Taiwan at least 183 days in a calendar year), their tax withholding rate on wages and salaries will drop to 6% starting April 2008.

This will apply to all payments starting April, 2008, including pay advances (note: this affects teachers pay for work in the month of April, but does not affect pay for work in the month of March)
This applies to all forms of teacher's income, including wages, salary, bonuses, event pay, and other forms of payment


You can see the English version of the new tax rules at
http://www.dot.gov.tw/display/show.asp?id=1205&lang=2&expand=2&thisitem=70&modify=1
(the change occurs in �Article 2�)

(Also, note that in "Article 11" there is a rule which may apply to teachers working at schools where they only have a small income.)


Additional Notes:
1. This DOES NOT affect your 2007 income or your 2008 tax filing (that you need to do before May 31, 2008).

2. The progressive tax rates (tax brackets) for filing in 2009 are also changing � these can be viewed at www.ntat.gov.tw/county/ntat_ch/content/aig701_list.jsp

The brackets are changing from:
1996-2007 tax years
6% bracket NT$ 0 - NT$ 370,000
13% bracket NT$ 370,001 - NT$ 990,000
21% bracket NT$ 990,001 - NT$ 1,980,000
30% bracket NT$ 1,980,001 - NT$ 3,720,000
40% bracket NT$ 3,720,001 - or greater

to:

2008 tax year
6% bracket NT$ 0 - NT$ 410,000
13% bracket NT$ 410,001 - NT$ 1,090,000
21% bracket NT$ 1,090,001 - NT$ 2,180,000
30% bracket NT$ 2,180,001 - NT$ 4,090,000
40% bracket NT$ 4,090,001 - or greater

Again, this DOES NOT affect your 2007 income or your 2008 tax filing



3. Because of these changes, there may be changes to both your monthly pay packet and your tax filing in 2009. Below are three examples of how these changes might affect you personally (these are approximations only to give you the basic idea � consider your own situation carefully).

Gross Monthly Income NT$ 50,000
Tax withheld on Monthly Income NT$ 3,000 (assumes 6% each month � if you are new to Taiwan, these numbers will be different)
Monthly take-home pay NT$ 47,000 (not including NHI deduction, etc)
Gross Annual Income NT$ 600,000
Total tax withheld on Annual Income NT$ 36,000
Typical net taxable income NT$ 399,000 (after standard deductions of NT$201,000)
Tax on taxable income NT$ 23,940 (using the new 2008 tax year brackets)
Tax refund (approximate) NT$ 12,060 *** a refund



Gross Monthly Income NT$ 75,000
Tax withheld on Monthly Income NT$ 4,500
Monthly take-home pay NT$ 70,500
Gross Annual Income NT$ 900,000
Total tax withheld on Annual Income NT$ 54,000
Typical net taxable income NT$ 699,000
Tax on taxable income NT$ 62,170
Tax refund (approximate) NT$ - 8,170 *** you owe more money


Gross Monthly Income NT$ 100,000
Tax withheld on Monthly Income NT$ 6,000
Monthly take-home pay NT$ 94,000
Gross Annual Income NT$1,200,000
Total tax withheld on Annual Income NT$ 72,000
Typical net taxable income NT$ 999,000
Tax on taxable income NT$ 101,170
Tax refund (approximate) NT$ - 29,170 *** you owe more money


4. Please note that it is the responsibility of every individual taxpayer (ie, you), and not your employer, to know the details of their own tax situation, and to be prepared to cover any extra payments that are required at the end of the tax year.