Job Discussion Forums

[brian]

Well tax time is upon us all again. The first part of this post is a personal experience that I had with an employer who failed to pay taxes on my behalf. The second half of the post covers general tax information.

Tax not paid by my employer � Here is my story!

I have seen a lot of posts here regarding employers who deduct tax from wages but fail to pay this money to the tax office. A fair share of replies go on to warn foreigners against allowing their employers to handle these tax affairs on their behalf. I have had experience with the two extremes when it comes to tax withholding. My advice is not to be afraid of taking advantage of your employer�s offer to assist you with your withholding tax, but ensure to retain written notification of the amount of all such deductions made for your own protection.

My first school here in Taiwan handled all of these matters for me, and each year over a four-year period they would provide me with my tax withholding statements on time so that I could file my tax return. The school had deducted 20% for my initial six months in Taiwan and 10% each month after that, which is a bit above the actual tax rate that I need to pay (6%), but in line with general procedures on making tax deductions. Upon doing my annual return I got most of this back - kind of like forced savings.

A more recent employer was the type of employer that seems to like to do things their own way, even if this puts them in contravention of laws. They acted with a total disregard for the law, and as my recent appeal to the tax office regarding this company has received a favorable outcome, I have posted my story here to inform others.

Having recently returned to live in Taiwan, I was considered to be a non-resident once again and had to go through the six month, 20% tax deduction procedure. I made this clear to my employer and it was outlined clearly in the employment contract provided by the school that each teacher was required to sign. For the first three months of employment my school didn�t deduct any tax from my wages, and in the following two months they deducted only 6%. Whilst I am aware that many teachers would be over the moon to have an employer who didn�t deduct tax from their wages, I am in a position whereby it is important that I ensure that all such affairs are in order. I realize that just because the deductions were not made doesn�t mean that the tax didn�t need to be paid. In response to my requests for clarification of the situation, my employer continued to assure me that everything was being conducted according to Taiwan Tax Law (as stated in my contract). After resigning my position I requested my tax withholding statements so that I could file my tax return, and their repeated failure to produce this documentation indicated that something was wrong. As the tax deadline drew near I had no choice but to proceed to the tax office in an effort to file a return without this paperwork. Of course this was not possible, however the tax office intervened on my behalf and upon involving the tax office the attitude of my employer changed quite considerably.

I have known for a while that my employers were less than honest, and this was one of my reasons for leaving them. At first the tax office were pretty much on the side of my employer, as my employer had obviously fed them a story that didn�t paint me favorably. Through documentation in hand I was able to show that I was not in the wrong, and once the tax office realized that the school had been lying to THEM, the tax office was more than willing to help me with my situation. The documentation I had retained from my time with my employer helped prove my point, and it became apparent to the tax office that my employer had effectively been pocketing thousands of dollars each month in tax deductions made from staff but not paid to the tax office. In fact, despite the fact that my employer was deducting tax from everyone�s wages each month, none of the five foreign teachers working at my school were even registered with the tax office. This in effect made it impossible for our school to make tax payments on behalf of teachers that didn�t even exist in the eyes of the tax office. My employer tried to claim ignorance of this fact, but the clause in our employment contract pertaining to tax payments clearly showed their awareness of their obligations and was the nail in their coffin. I sat next to the woman in the tax office as she spoke with my employer, and she was one tough cookie. I certainly wouldn�t want to get on her bad side! As a result of all of this, my employers were required to pay the shortfall in tax payments made on my behalf (about NTD40,000) to the tax office immediately, and my understanding is that they were also fined an amount equal to three times the amount of unpaid taxes. I am unsure whether they will also be held accountable for the non-payment of taxes for the other teachers at the school, but to be honest I don�t really care either way.

The good news was that I didn�t need to pay anything. As my employer had failed to honor their obligations, and had failed to act upon my earlier enquiries on the matter, the tax office could see that I had done everything that I could to satisfy my tax requirements. As I no longer work for the school, there was no way that they could now make the deductions from my wages to cover this shortfall and therefore my employer has to make up for the shortfall themselves. My employer was understandably pissed about this state of affairs and kept going off about how my decision to involve the tax office had cost them a considerable amount of money. My answer was simple. I had done my best to sort things out with them before going to the tax office, but they chose to be obstructive and fail to help me. I had made repeated requests for the documentation that they were legally required to given me and had given them ample opportunity (three months) to organize things on my behalf, but they had failed to do anything, leaving me no option but to try to sort things out myself. I pointed out to them that they had not been fined because I went to the tax office, they had been fined because they had done something wrong. Whilst I initially contacted the tax office thinking that I would more than likely have to make up for the shortfall myself, I could see that my employer had managed to piss the tax office off enough that they were willing to stand with me in having my employer pay an extra penalty for their poor behavior. This was quite lucky for me as had my employer shown the tax office the respect that they deserved (rather than lying to them as they had lied to me), I would have had to pay 20% of what I had earned, none of which would have been refundable.

One warning about the above. In my dealings with the tax office it became apparent that they had taken the time to check out my past tax history here in Taiwan. If your tax records aren�t squeaky clean you might want to reconsider appealing to the tax office for help. This is just one more reason that I am an advocate of working legally and doing the right thing during my time here in Taiwan. It has certainly paid off for me. Had I been working illegally then my employer would quite possibly have gotten away with deducting �tax� from my wages to line their own pockets. Finally, the above is not meant to act as a rule for others, but merely as a guide to how things can occur. Hope it helps someone.

Now here is the lowdown on taxes

The tax year in Taiwan runs from January to December. Tax returns must be lodged before May 31st of the following year.

For your first six months (183 days) in Taiwan you will need to pay 20% of what you earn to the tax office. This period of time is determined by the entry / exit stamps in your passport and not your employment contract. If you arrive after July 31st you will not be able to meet this deadline and will therefore forfeit the full 20% of tax that you have paid. If you can arrive before this date, and are present in Taiwan for longer than 183 days in that tax year, then you can claim a partial refund on taxes paid, in the following tax year. Be careful as any time spent out of the country (for visa runs etc.) will not count towards this 183 day period. In order to ensure that you can meet the cutoff, it is best to arrive no later than the middle of June.

Most schools will make deductions and pay taxes on your behalf. Be sure to keep written records of any amounts deducted from your wages. The best way to do this is have your employer give you a pay slip showing how much you earned and how much tax you have paid. If a school doesn�t want to oblige with this then you may be better off to collect your full wage including tax and pay the tax yourself.

The progressive tax rates are as follows:

0 - 370,000 x 6% - 0 =
370,001 - 990,000 x 13% - 25,900 =
990,001 � 1,980,000 x 21% - 105,100 =
1,980,001 � 3,720,000 x 30% - 283,300 =
Over 3,720,001 x 40% - 655,300 =

Taking into account deductions and exemptions (NT74,000 for singles), most teachers will end up having to pay 6% income tax. If you have paid more than your tax rate during the course of the year then you will be entitled to a partial refund. This refund is sent to your bank or can be picked up within about 14 days of doing your return.

When lodging your tax return be sure to take your passport, ARC, yellow tax withholding certificates, bank details and employment contract (may not be required but could be handy to have). The paperwork is all in English and Chinese, and there are English speaking staff available to deal with your enquiries. In the Taipei office, these English speaking staff are located at the first counter as you go in the main door. The procedure is to fill out the paperwork, take a number and then have your documents processed. It generally takes about an hour. Longer if they are busy.

To lodge a tax return you will need to visit your local tax office:

1. National Tax Administration of Taipei, M.O.F.Address：2, Sec.1, Chung Hwa Road, Taipei 10802, R.O.C.TEL：(02)23113711 Ext,1116-1118

2. National Tax Administration of the Northern Taiwan Province, M.O.F.TEL：(03)3396789 Ext.434

3. National Tax Administration of the Central Taiwan Province, M.O.F.TEL：(04)3291111 Ext.332

4. National Tax Administration of the Southern Taiwan Province, M.O.F.TEL：(06)2223111 Ext.8159

5. National Tax Administration of Kaohsiung, M.O.F.Address：148,Kwang Chou 1st st.,Kaohsiung, R.O.C.TEL：(07)7256600 Ext.8102,8210,8239


For further information please visit the following English language websites:

National Tax Administration of Taipei
http://www.ntak.gov.tw/forei/aliens/english/index.htm
http://www.ntat.gov.tw/english/information/foreign_E_Q.asp

[Aristotle]

You also need to keep in mind that if you are in Taiwan for 90 days or less on a non work authorized visa, you are not required to pay any taxes on any income regardless of your situation.

I have a report from a teacher that had his taxes withheld by his employer only to find out that his employer never submitted them to the tax office.
When he brought the certified stamped pay slips in to show as evidence he found out that the company that stamped his pay slips and paid him had been defunct for 2 years. Those receipts were then used as evidence against him and he we barred from leaving Taiwan until he paid his 20 percent tax, again.

I strongly recommend that anyone wishing to work in Taiwan do so on a multiple entry tourist visa for business purposes and make visa runs. In the end you make more money and don't have to worry about the lingering tax questions both here or in your home country.
Add to that the recent crackdown on teachers the government intentionally deceived and deported as well as unofficial deportation.
Welcome to Taiwan!
A.

[brian]

[killian]

the vast majority of teachers do begin illegally. the schools want us working NOW, irrespective of our visa/ARC status. begin good troopers we step into the breach to help out. they work us and deduct taxes from us that they are fully aware of that they cannot ever report to the tax office as we are not yet legal workers. like a newbie is ever gonna know that "the chinese are just so much smarter than foreigners"!

haven't you noticed that a good many "one year" contracts here are often in reality 15 months? such is precisely because that for the first few months here many of us are illegal, undocumented workers. the bosses don't care. they are more than happy to re-pocket 20% of our pay under the guise of taxes. since most of us never receive pay stubs, even the small task of documenting our pay is impossible.

anyone who thinks they are fully legal in taiwan isn't looking closely enough.

live free.