Job Discussion Forums

[heatwave22]

Many posts and sites say it's best, tax-wise, to arrive in Taiwan before June 30th because you'll be taxed at a lower rate that year. But a well-established ESL-in-Taiwan site has a detailed article on the subject that concludes that, because teaching contracts are always one year, if you do this, you'll start each of your remaining calendar years with the govt. thinking you may not stay 183 days (because your contract will run out sooner) and you'll end up getting taxed at the higher rate and waiting for your refund every year after the year you arrive. So this article recommends taking your lumps the first year and not all the years after.

Does that article sound correct to people, if I plan to stay and teach multiple years? I suppose I could arrive before June 30th but then not start a one-year contract until later and have the best of everything? Any thoughts?

[yamahuh]

Sounds like you're talkiing about Tealit but if not I'll hit the highlights:

Arrive in Taiwan After the 183 Day Cutoff You arrive in Taiwan AFTER July 2nd and sign a one-year contract. There are less than 183 days left in the calendar year you�ve arrived in. You will be taxed at 18% for all the remaining months of the current year. When the new year starts the time remaining on your contract has you in Taiwan for MORE than 183 days. So, you'll see your rates reduced to the normal level for the remaining months on your contract.

Arrive in Taiwan Before the 183 Day Cutoff, But Not on January 1st
You arrive in Taiwan BEFORE July 2nd --- but after January 1st --- and sign a 1-year contract. This contract will have you in Taiwan for more than 183 days for the calendar year you�ve arrived in. You would be taxed at standard rates. However, your one-year contract trails into the NEXT calendar year, since you signed after January 1st. As that new year starts your remaining contracted time is less than 183 days. Your tax rate for that time will return to 18%.

Arrive in Taiwan & Start Work on January 1st
You arrive in Taiwan & start on January 1st. Your contract will have you in the country for more than 183 days for the calendar year. For the full year you will pay standard rates. If you sign again on January 1st you would again pay the standard rates for the full year.

HOWEVER Taxes in Taiwan are very - let's say - flexible...
for example, my personal situations have included paying 20% for 6 months and then nothing; paying nothing for the entire year; paying approximately 2.3% for the entire year and paying 18% for 6 months followed by a reduced rate.

Currently I am working at a school that I signed a contract with starting on January 1st - although the article quoted above would have you believe I should be paying standard rates of 12% for the entire year, I am actually paying 18% for 6 months and then nothing...
Why?
No idea...

In reality it doesn't seem to depend so much on when you arrive as it does on how badly your employer is underdeclaring your earnings to the government. The double contract is still seems to be common practice - you may be asked to sign one declaring you are working 14 hours a week @ a discounted hourly rate (which goes to the government and which your actual monthly taxes will be based on) and one one for you and your employer that details the actualities of your agreement.

So...probably best to try and arrive to begin work as close to January 1st as possible and see how it all plays out.

[dangerousapple]

The tax bureau doesn't care about contracts, no matter what misinformation Tealit is currently stating. It counts calendar days period. On January 1st everyone's clock gets reset at zero, and the 183 day rule comes into effect. It doesn't matter if you are working or unemployed, are a newbie, or that you've been here for 15 years and are here on a marriage visa, during the 1st 183 days that you are physically present in Taiwan your withholding rate is 18%.

What schools choose to withhold and/or report is another matter entirely, as is the creativity of your accountant if you have one.

Therefore, it is better to come at or near the beginning of the year, and make sure that you count your days before you head out on vacation or leave Taiwan for good.

I'm a school owner and have been dealing with the "experts" at the tax bureau for many years, both for myself and on behalf of my staff. This withholding nonsense has been irritating me more and more as the years go by, but unfortunately that's how it is.

[yamahuh]

Is the 'reset clock' a new development for this year?

[dangerousapple]

The 183 day rule used to only apply to your first year in Taiwan. If you stayed more than one year, you were considered to be a resident, even if you left before 183 days in your second or later year. But now everyone is treated the same - as if this were your first year, no matter how long you have lived here.

The tax bureau very quietly made this change in late 2008. They made no announcements of this, but just changed the regulations as listed on their websites and in their official documentation. Most schools didn't know about this change until the tax bureau contacted them to say not enough taxes were being withheld. The first time I called them to ask WTF was going on, they told me it had ALWAYS been like this. Anyone who has lived here more than a few years knows how it was before. It took about 6 months and many inquiries to get them to admit to me that yes, they made this change. Jerks.

To me, this change is nothing more than an attempt to squeeze more money out of the foreign blue-collar laborers in Taiwan. When their contract is up, it's up, and they have to leave. The government therefore has a 50/50 chance of being able to keep all their taxes instead of giving a refund. Us furriners were never the focus, but we've been caught up in it.

My way of protesting is to ensure that my banks and investments all give me withholding statements showing the 18% they have taken off, and that I take all of these litttle papers to the tax office, where I smile sweetly and tell them to do a joint return with my Taiwanese wife, and to make sure I get the NT$2 back (or whatever) that I am entitled to. Not much of a protest, but I enjoy the look of pain that crosses the clerk's face when I do it.

[yamahuh]

[heatwave22]

Yes, I was talking about tealit......when i mention other sites on here it usually gets a modedit, so I was just avoiding that. Thanks for the responses. It sounds unclear.

Let me ask two things though.

1) The 183-day clock starts when you ARRIVE, is that correct? So if I arrived at the end of June and didn't start working until September, I could still get a lower tax rate.

2) Is it 183 consecutive days so no trips to other countries during that time?

[yamahuh]

My understanding of the situation is this:

1: First off - if you arrived in June but didn't start until September you'd be almost guaranteed a visa run which would probably cost you more than you'd 'save' by not paying tax for a couple of months.

Secondly - if you arrived with more than 183 days left in the year you would still pay 18% tax (once you started working) until you had been phsically present in the country for 183 days. This would take you until the end of the year - just in time to start paying 18% all over again for the first 183 days of the next year...

2: 183 days total is my understanding - so, any time outside the country is marked against the 183 days 'in country' required to be considered a resident and qualify for the lower tax rate.

Dangerousapple please feel free to correct me if these comments aren't correct.

[JZer]

[dangerousapple]

Schools are legally required to remit income tax every month. But this is Taiwan, so who knows how rigorously that rule gets enforced. My accountant told me the tax office wants schools to give withholding statements to new teachers every month, so they (the teachers) can prove at tax season that the proper amount was remitted. We do that for new teachers.

The tax bureau has also made it clear that schools will be held responsible for any under-reporting, in the case where a teacher buggers off before the 183 days are up, and not enough taxes have been remitted. Therefore its in a school's best interests to report things timely and legally.

But again, this is Taiwan. Most people don't follow the rules, even if they aren't really saving themselves any money in the long run.

And Yamahuh, your info sounds good to me.