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Taxes


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Date Posted: 2009-12-02 Location: ,
●The following regulations are applicable to non-residents of the Republic of China

1.The withholding tax rate on dividend distributed by a company or profit distributed by a cooperative is 30%. However, it would be 20% in case of the investment which was approved in accordance with one of the following rules:

-The Statute for Investment by Overseas Chinese

-The Statute for Investment by Foreign nationals

-The Regulations Governing Securities Investment by Overseas Chinese and Foreign Investors and Procedures for Remittance

2.The withholding tax rate on salaries is 20%.

3.The withholding tax rate on commissions is 20%.

4.The withholding tax rate on interest is 20%.The interest accrued from beneficiary securities or asset-based securities issued according to the Financial Asset Securitization Act and the Real Estate Securitization Act shall be taxed at the rate of 6%.

5.The withholding tax rate on rentals is 20%

6.The withholding tax rate on royalties is 20%

7.The withholding tax rate on cash awards or payments given in contests or prizes for a chance winning is 20%. However, it is tax-exempted when the prize is not more than NT$2,000 from lottery tickets or uniform invoices under the auspices of the government.

8.Withholding tax rate on fees for professional practice is 20%.

9.After deducting a regulative exemption, the retirement payments or pensions shall be withheld at the rate of 20%
Additionally, income which is not subject to the Withholding Code shall be taxed in scope with the following withholding tax rate.

-Income from property transactions shall be filed and taxed at the rate of 35%

-Profits from occasional trade shall be filed and taxed at the rate of 30%

-Income from transferring the tax-differed stocks, the par value of the stocks shall be deemed as the taxable income of the transfer year. If the actual transfer price of such stocks at the time of sale or the market value of such stocks at the time of bestowal or distribution of estate is lower than the par value, the actual transfer price or the market value shall be deemed the taxable income. Such an income shall be filed and taxed at the rate of 30%

However such stocks obtained for the investment approved in accordance with the Statute for Investment by Overseas Chinese or the Statute for Investment by Foreign Nationals, as well as the Regulations Governing Securities Investment by Overseas Chinese and Foreign Investors and Procedures for Remittance, the taxable income shall be taxed at the rate of 20%

-Mortgage interest and Miscellaneous income shall be filed and taxed at the rate of 20%

-Where a trust deed is set up by a profit-seeking enterprise, the beneficiary shall be taxed at the rate of 20% on the value of his entitlement to the trust in the year of setting up, and a newly replaced beneficiary shall be taxed in the year of replacement. Furthermore, the beneficiaries shall be taxed at the rate of 20% on the increasing part of the value of their entitlements when the enterprise makes an increment on the trust fund.

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●Tax credit for selling an dwelling and buying one again not later than a period of two years

If a house resided in by the taxpayer (hereafter called "old residence") is sold by him and the gain from the sale is consolidated and taxed, and within a period of 2 years after the date of public registration of such a sale, another house is purchased and used as an owner occupied dwelling at a price exceeding selling price of the old residence, the taxpayer may claim a credit or a refund of aforesaid income tax on the year in which public registration of such a purchase is completed. This provision shall also be applicable in cases where a taxpayer buys first and sells later.

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●Investment Tax Credit

1.Taxpayers who invest in designated enterprises under Article 8 of the Statute for Upgrading Industries before the Dec. 31, 1999 revision, or invest in entities under Article 33 of the Statute for Encouragement of Private Participation in Transportation Infrastructure Projects, may credit up to 20% of the price paid for the acquisition of the registered share certificates of the said enterprises or entities against the individual income tax payable for the year in which the two years holding requirement is met. If the credit is larger than the tax payable of the current year, the balance of the said credit may be carried forward for up to four years.

2.Taxpayers who invest in newly emerging, important and strategic industries under Article 8 of the Statute for Upgrading Industries after the Dec. 31, 1999 revision may credit up to a designated percentage of the price paid for the acquisition of the registered share certificates of the said enterprises or entities against the individual income tax payable within five years starting from the year in which the three years holding requirements is met.

3.The credit in each year shall be limited to not more than 50% of individual income tax payable, with the exception that this limitation shall not apply to the credit in the final year.

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●The way of a resident shareholder filing tax on dividends or profits of the year of 1998 or the following years

1.When a company (or a cooperative) making distribution on dividends or profits of the year of 1998 or of the following years to its resident shareholder, the company should prepare "Dividend Voucher" for him to file his tax return. The resident should aggregate the gross dividend in the Individual Incoming Tax Return of the year of the dividend received, and use the imputation tax credit carried in the dividend voucher to offset the income tax payable.

2.When making the above mentioned dividends or profits to its non-resident shareholder, the company should issue him a "tax withholding statement"。The non-resident shareholder shall not use the tax withheld to offset tax payable in case of that he need to file a tax return。 If the non-resident shareholder continuing to stay in ROC for 183 days or more in the same taxable year,he(becoming a resident status ) shall ask the company to correct the "Tax Withholding Statement" to "Dividend Voucher" for filing tax return and offsetting the tax payable.

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●Paying Taxes and Obtaining Refunds

Taxpayers can make payments at any local bank in Taiwan with a self-payment bill which is filled out by himself or with a payment bill which is filled out by this Administration for the income tax assessed. If the tax withholding amount exceeds the tax payable, the overpaid amount will be refunded according to general procedures.

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●Guarantee for temporary leave

An alien, who as a "Resident of the ROC" intends to leave temporarily and return in a short period may apply for an income tax certificate for the current year with his payment receipt of the previous year by appointing a Chinese citizen to be the guarantor and filling out an "Agent Appointment and Acceptance" form before he applies with the Police Station for an exit permit for the said year.

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●Tax Certification

1.An alien shall obtain an income tax certificate from this Administration before his departure or upon application for his exit permit or for a visa extension of stay.

2.To credit one's income tax payment which he is obliged to pay in his native country, an official certificate of the tax amount (paid to the ROC) will be issued upon his request.

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●Penalties

1.Late filing: Taxpayers shall be surcharged interest on the amount of tax payable. The interest shall be calculated on a daily basis at the interest rate quoted by the Post Office's one-year fixed deposit.

2.Omission or misfiling: A penalty of a maximum of two times the amount of the tax underpaid.

3.Failure to file: A penalty of a maximum of three times the amount of the tax underpaid.

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●Aliens who have any inquiry when filing an individual income tax return that is not fully answered in these instructions are welcome to call or come in person to the Foreign Taxpayers Section of this Administration for further information

1.Taipei National Tax Administration , M.O.F.Address: 2, Sec.1, Jhonghua Road, Taipei 108, R.O.C.TEL: (02)23113711 Ext.1116-1118

2.National Tax Administration of Northern Taiwan Province, M.O.F.TEL: (03)3396789 Ext.1430

3.National Tax Administration of Central Taiwan Province, M.O.F.TEL: (04)23051111 Ext.1360

4.National Tax Administration of Southern Taiwan Province, M.O.F.TEL: (06)2223111 Ext.1203

5.Kaohsiung National Tax Administration , M.O.F.Address: 148,Guangjhou 1st St., Lingya District, Kaohsiung 802, R.O.C.TEL: (07)7256600 Ext.8102,8210

Date Posted: 2009-12-02 Location: ,
●The Alien Individual Income Tax and the Period of Residence

For any alien having income from sources in the Republic of China, individual income tax shall be levied on the income derived from such sources in accordance with the Income Tax Act of the ROC. The alien taxpayers are divided into "Non-Residents of the ROC" and "Residents of the ROC" based on their length of stay. The following are the different ways for aliens to file income tax returns.

1."Non-Residents" of the Republic of China

◦For an individual who stays in the Republic of China not more than 90 days within a taxable year (Jan. 1 to Dec. 31), the income derived from sources in the Republic of China shall be withheld according to the withholding rate (see Article 15) and paid at the respective sources. The taxpayer need not file an income tax return.

◦For an individual who stays in the Republic of China over 90 days but less than 183 days within the same taxable year, individual income tax shall be declared and computed according to the withholding rate (see Article 15) on his remuneration derived within or outside the Republic of China for his services rendered in the ROC.

2."Residents" of the Republic of China

◦An individual who stays in the Republic of China for 183 days or more within a taxable year is regarded as a resident and the individual income tax shall be declared and assessed by a progressive rate (See Article 14) on the amount of his net consolidated income (taxable income) which shall be the annual gross consolidated income (including the various incomes derived within the ROC and the remuneration derived outside the ROC for service rendered in the ROC) minus the exemptions and deductions.

◦When an alien is considered a resident within one taxable year (i.e. he stays for 183 days or more in one taxable year) and continues to stay uninterrupted over into the next year without leaving the ROC, he will continue to be treated as a resident during the following year until the date of termination of residence, regardless of how many days of residence occur in the following year.

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●Income from Sources in the Republic of China

The following categories are considered income from the Republic of China sources.

1.Dividends distributed by companies incorporated and registered in accordance with the Company Law of the Republic of China and by foreign companies authorized by the Government of the Republic of China to operate within the Republic of China.

2.Profits distributed by profit-seeking enterprises organized in the form of a cooperative or a partnership within the Republic of China.

3.Remunerations for services rendered by an individual within the Republic of China. Income derived from employer(s) outside the Republic of China for services rendered in the Republic of China for those who have stayed in the Republic of China over 90 days within one taxable year.

4.Professional fees for performance or services rendered by the practitioner of a profession within the Republic of China.

5.Interest obtained from governments of various levels of the Republic of China, from juristic persons within the Republic of China and from individuals residing in the Republic of China.

6.Rentals obtained from lease of property situated within the Republic of China

7.Royalties obtained from patents, trademarks, copyrights, secret devices and franchises by virtue of their being made available for use by other persons within the Republic of China.

8.Gains from the transaction in properties and rights within the Republic of China.

9.Profits from the operation of industry, commerce, agriculture, forestry, fishery, animal husbandry, mining, and metallurgy enterprises within the Republic of China.

10.Prizes and awards obtained from participating in various contests of skill, games or lotteries, etc. in the Republic of China.

11.Payments for retirement, severance, resignation, or pensions not including insurance payments provided that such disbursements do not include payments from periodically withheld amounts of salaries and resulting interest.

12.Any other income obtained within the territory of the Republic of China.

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●Definition of "Taxable Year"

A full year from Jan. 1 through Dec. 31 is a Taxable Year.

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●Computation of Residence

The computation of the resident period of an alien in the ROC is based in the date stamped on his/her passport. If an alien enters and exits this country a number of times within a taxable year, the resident period shall be accumulated.

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●Determination of Salary and Wages Income

For an alien who remains in the ROC within one taxable year:

1.Not more than 90 days:

◦The income tax shall be withheld at the income sources or declared and taxed by withholding rate.

◦The income tax shall be exempted for income derived from employer(s) outside the ROC.

2.More than 90 days:

◦The income derived within the ROC shall be filed in accordance with a withholding statement, dividend voucher or as declared by the taxpayer.

◦Income paid by an employer outside the territory of the ROC must also be reported by the taxpayer. The taxpayer will be required to submit a certificate of earnings notarized by the tax authorities concerned from the employer(s) outside the territory of the ROC. If a certificate from the tax authorities is not available, a notarized certificate issued by a CPA firm is acceptable. However, a photocopy of the license of the CPA who issues the certificate must also be submitted. Any income received in foreign currency should be exchanged into NT dollars on the basis of the official foreign exchange rates or prevailing transferred rates at the time the income is actually or constructively received.

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●When is tax payment due ?

The tax payment periods for aliens are different for different lengths of resident status in the ROC.

1.For an individual staying in the Republic of China for not more than 90 days, the income tax payable shall be withheld directly at the time of payment by the withholder in accordance with the withholding rate. However, if one has income occurring from property transaction, occasional trade, interest from mortgages, etc., he should declare and pay tax before his departure.

2.For an individual staying in the Republic of China over 90 days but less than 183 days the income tax payable shall be withheld directly at the time of payment by the withholder in accordance with the withholding rate. (The employer is responsible to prepare a "Tax Withholding Statement" for the taxpayer while he is filing a tax return.) Furthermore, income derived from abroad for services rendered within the ROC, or any income which has no tax withholding statement to be prepared, such as the income occurring from property transaction, occasional trade, interest from mortgages, etc., should be declared and tax paid before departure.

3.Any individual staying in the Republic of China for 183 days or more shall, before May 31 of the current year, file the annual income tax return for the preceding year.
However, any individual who intends to leave the territory of the ROC in the interim of the year, and will not return within the same year, shall file his income tax return one week before his/her departure.

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●Tax Services

Where to file the tax return

1.Please file your individual income tax return with the tax authority located in the district where you stay.

2.Individuals residing in Taipei City should file their returns at the Foreign Taxpayers Section, Taipei National Tax Administration , M.O.F.(No. 2, Sec.1, Jhonghua Road, Taipei 108, R.O.C.) TEL:(02)23113711 Ext.1116-1118

Individuals residing in Kaohsiung City should file their returns at the Foreign Taxpayers Section, Kaohsiung National Tax Administration , M.O.F. (No. 148,Guangjhou 1st st., Kaohsiung, R.O.C.)TEL:(07)7256600 Ext.8102,8210

Other individuals residing in Taiwan should file their returns at the branch offices and service centers of the National Tax Administration.

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●If the income tax was initially paid and filed while the alien had stayed less than 183 days, and then the said alien continued to stay for more than 183 days in the same taxable year, how should his income tax be computed for that year?


Answer:
If the alien left the Republic of China after he had been taxed at the flat rate for non-resident status, then returned in the same taxable year and continued to stay in the ROC up to 183 days or more, the tax payable for that year should be reassessed at the progressive rate for resident status. Tax previously paid could be credited.

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●What kinds of papers and documents should be submitted when filing individual income tax?

A valid passport, tax withholding statement, dividend voucher, certificate of residence and certificate of earnings paid abroad for services performed in the ROC are basic data. However, if a taxpayer with special qualifications wants to apply for tax exemptions or deductions, the proper documents of evidence should be submitted to the tax authorities for tax assessment.

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●Scope of Exemption

The following categories of income can be exempted by submitting the necessary documents:

1.Salaries of military personnel in active service.

2.Salaries of teachers and employees of nurseries, kindergartens, public primary and junior high schools and private primary and junior high schools.

3.Scholarships and subsidies granted by government of the ROC and foreign governments, international institutions educational,cultural, and scientific research organizations or associations, and other public or private organizations for encouragement of advanced studies, research or participation in scientific and professional training, except for the scholarships or subsidies received as he remuneration for services rendered to the grantors.

4.Income derived by virtue of office, of foreign diplomatic officials, consular officials and other persons entitled to treatment accrdable to diplomatic officials in the service of foreign embassies, legations and consulates in the Republic of China.

5.Income derived by virtue of office, of employees, other than diplomatic officials, consular officials and persons entitled to diplomatic treatment, who, being nationals of a foreign country, are employed by the embassy, legation or consulate of their country or by subsidiary agencies thereof in the Republic of China provided that reciprocal treatment is accorded by the foreign country concerned to employees of Chinese nationality, employed by embassies, legations or consulates of the Republic of China or by subsidiary agencies thereof, in the foreign country concerned.

6.Salaries paid by foreign governmental agencies, organizations or educational institutions to foreign technicians and professors of universities and colleges for services rendered within the territory of the Republic of China under technical cooperation or cultural exchange agreements made by and between such foreign governmental agencies, organizations or educational institutions and those of the Republic of China.

7.Income derived as royalties from written articles, copyright books, composed music, scored music, dramas, cartoons, or honorariums from speeches or lectures on an hourly basis. However, the total amount of such income in the whole year should not exceed NT$180,000.

8.Various payments made to personnel engaged in handling various kinds of examinations held by governmental agencies and in entrances examinations held by public and private schools of various levels.

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●Encouragement of Investment

1.Where an alien invests in the Republic of China in accordance with the Statute for Investment by Overseas Chinese or the Statute for Investment by Foreign Nationals, and acts as the director, supervisor, or manager of the company in which he invests, staying in the ROC over 183 days within one taxable year for the purpose of managing or administrating the business; the dividends received from the business shall be withheld by the withholder in accordance with the Income Tax Act at the rate of 20% at the time of payment. Thereafter, such a dividend will not be integrated into his gross income while filing an individual income tax return.

2.When a foreign profit-seeking enterprise, whose investment in the Republic of China is approved under the Statute for Investment by Overseas Chinese or the Statute for Investment by Foreign Nationals, sends a director, manager or technical staff to the Republic of China for a stay of not more than 183 days in a taxable year on assignments such as implementation of investment, construction of plants, or market surveys, remuneration received by the director, manager, or technical staff from the foreign profit-seeking enterprise will not be treated as an income source by the ROC, and therefore is not subject to the ROC income tax.

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●Tax due on a spouse's salary may choose to be figured separately. However, such a tax due should be filed jointly with the taxpayer's

For an alien who remains in the ROC within one taxable year

All income of an alien resident, his or her spouse, and their dependents should be filed jointly by the taxpayer on one return. While the taxpayer may choose to calculate tax due on the salary income as a taxpayer and also separately calculate the tax due on salary income of or his or her spouse and then combine that tax due with the taxpayer's own when filing their joint return, only the exemption and special deduction of the salary/wage income of the person whose salary income is computed separately can be claimed when calculating the tax due on salary/wage income computed separately.

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●Progressive Tax Rates. (Unit: NT$)

Net Taxable Income x Tax Rate - Progressive Difference =Tax Payable

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 =
3,720,001~ x 40% - 655,300 =
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