Job Discussion Forums

[yamahuh]

'Tis that time of year when everyone starts dreading the tax-man's cut so here's my question: does ANYONE pay the full 20% withholding tax?

It's been 2 years/jobs since I paid my full whack of 20% and although it hurt when I was paying, it felt AWESOME when I wasn't for the last 6 months of the contract. I realize it's all changed in the past couple of years but my last job cooked the books and I paid $1600 on $68K, the one before that charged me $0 on $58K. The new one is going to apparently charge me the full 20%.

Can't say I'm looking forward to losing that much money out of my pocket and I don't care who says its' an 'enforced savings program' - I'm an adult and don't need someone to force me to save cash. I'd rather have it now than have to file for it next year...

Thoughts?

[123Loto]

I rather agree with you on the "enforced savings scheme" idea. It's bollocks.

The fact remains that you lost control of that money for, on average, 15 months. Invested with a 5% return, that's 1.25% of your money down the tube. Lost. Gone. For example, if you're making 100k a month, that's 1125NTD you lose for every month that you are paying the higher tax rate.

Or 6750NTD for the whole 6 months. So whenever someone used to tell me that it was just "an enforced savings scheme" I immediately knew I was talking to a person with low financial IQ.

Don't pee on my shoes and tell me it's raining.

Math check: 100000NTD monthly pay check is taxed at 18% = $18,000, each month for 6 months = $108,000. You don't get your tax refund back for 12 months after the last month. That means the government gets your money for 18 months (for the first month's tax you paid) and 12 months (for the last month's tax you paid). The average is 15 months. If you invest $108,000 at 5% for 15 months you will get $6750NTD. This ignores the benefit of compounding your returns too, so actually it's higher.

[yamahuh]

For anyone looking for Tax rate info:-

Taxes for the current year are filed in May of the next year. Tax rates depend on your net income for the year: earn up to 500,000, your tax rate is 5%,
500,001 to 1,130,000 it's 12%,
1,130,001 to 2,260,000 it's 20%;
2,260,001 to 4,230,000 it's 30%;
4,230,001 +...40%.
The most common for teachers is 13%. If you're single and unmarried the first NT$76,000 earned is untaxed.

For more info go here:

http://www.tealit.com/article_categories.php?section=arcs&article=taiwan-taxes-teaching-white-collar-workers

[123Loto]

When people usually talk about taxes in Taiwan they could mean one of two things:

The withholding rate - this is the rate at which your employer is supposed to tax you throughout the year. This is currently 18% for the first half of the year and 6% for the second half of the year. (I'm not in Taiwan so if anyone sees any errors with these figures feel free to point them out).

The final tax rate (the one quoted above by yamahuh) is what the government will end up taxing you.

Unfortunately it's not quite as simple as being in a certain "tax bracket" because the Taiwanese government uses a formula which, in effect, creates a sliding scale of tax. They list the tax brackets yamahuh has quoted but it's almost like they're trying to be deliberately obtuse. (Probably a problem attributable to many tax regimes around the world!!!)

Furthermore, you have automatic tax deductions applied to your income... plus other deductions that you can make as long as you hold onto your tax receipts.