Taxation in Taiwan

Last updated
National Taxation Bureau of the Central Area of the Ministry of Finance Cai Zheng Bu Zhong Qu Guo Shui Ju .jpg
National Taxation Bureau of the Central Area of the Ministry of Finance

Taxes provide an important source of revenue for various levels of the Government of the Republic of China. The tax revenue of Taiwan in 2015 amounted NT$2.1 trillion. [1]

A tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures. A failure to pay, along with evasion of or resistance to taxation, is punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent.

Government of the Republic of China ROC government since 1948

The Government of the Republic of China, commonly known as the Government of Taiwan, is the democratic, constitutional government that exercises control over Taiwan and the other islands in the free area. The president is the head of state. The government consists of five Yuans (branches), the Executive Yuan, Legislative Yuan, Judicial Yuan, Control Yuan, and Examination Yuan.

Contents

Tax administration

The Ministry of Finance, which is part of the Executive Yuan, is the highest government entity responsible for implementing taxation policies and overseeing the leveling and collection of taxes. Taxation occurs at both the national and local government level.

Executive Yuan The executive body of the Republic of China

The Executive Yuan is the executive branch of the government of the Republic of China on Taiwan.

National taxes

Two broad categories of taxes exist at the national level: customs duties and inland taxes. Customs duties are administered by the Directorate-General of Customs, which has local offices throughout the country. Five national tax administrations who are directly subordinate to the central government handle oversight of all inland taxes. Inland taxes is a broad term that includes: [2]

Local taxes

Brief classification of real estate related tax in Taiwan Brief classification of real estate related tax in Taiwan.jpg
Brief classification of real estate related tax in Taiwan

Individual municipalities, counties, and cities have set up Revenue Service Offices responsible for collecting a range of taxes, including: [2] [3]

Tax legislation

Unlike the Internal Revenue Code in the United States, there isn't one law that governs taxation in Taiwan. Rather, taxes are governed by a series of laws and regulations each related to a specific type of tax. As the chief legislative body, the Legislative Yuan plays an important role in formulating and revising tax related laws. The Income Tax Act is the primary law that governs individual income and profit-seeking enterprise income taxes. [4]

The Internal Revenue Code (IRC), formally the Internal Revenue Code of 1986, is the domestic portion of federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code (USC). It is organized topically, into subtitles and sections, covering income tax, payroll taxes, estate taxes, gift taxes, and excise taxes; as well as procedure and administration. Its implementing agency is the Internal Revenue Service.

United States federal republic in North America

The United States of America (USA), commonly known as the United States or America, is a country composed of 50 states, a federal district, five major self-governing territories, and various possessions. At 3.8 million square miles, the United States is the world's third or fourth largest country by total area and is slightly smaller than the entire continent of Europe's 3.9 million square miles. With a population of over 327 million people, the U.S. is the third most populous country. The capital is Washington, D.C., and the largest city by population is New York City. Forty-eight states and the capital's federal district are contiguous in North America between Canada and Mexico. The State of Alaska is in the northwest corner of North America, bordered by Canada to the east and across the Bering Strait from Russia to the west. The State of Hawaii is an archipelago in the mid-Pacific Ocean. The U.S. territories are scattered about the Pacific Ocean and the Caribbean Sea, stretching across nine official time zones. The extremely diverse geography, climate, and wildlife of the United States make it one of the world's 17 megadiverse countries.

Legislative Yuan National legislature of Republic of China

The Legislative Yuan is the unicameral legislature of the Republic of China now based in Taiwan. It is one of the five branches of government stipulated by the Constitution of the Republic of China, which follows Sun Yat-sen's Three Principles of the People. Sometimes referred to as a "parliament", the Legislative Yuan, under Sun's political theory, is a branch of government. According to the Judicial Yuan's interpretation number 76 of the Constitution (1957), the parliament of the republic includes all three of the National Assembly, the Legislative Yuan, and the Control Yuan. However, after constitutional amendments effectively transferring almost all of the National Assembly's powers to the Legislative Yuan in the late 1990s, it has become more common in Taiwanese newspapers to refer to the Legislative Yuan as “the parliament”.

Individual Income Tax

Both residents and non-residents are assessed individual income tax on Taiwan-sourced income unless an exception is provided in the Income Tax Act and related laws. Individuals are considered residents of Taiwan for tax purposes if they are either domiciled there, or spend for 183 days or longer in a taxable year.

Income received in exchange for services rendered while physically present in Taiwan is considered to be Taiwan-sourced income regardless of if the payer is a local or offshore person or entity. One major exception to this rule exists for non-residents who are physically present in Taiwan for less than 91 calendar days in a year and who are only paid compensation by offshore entities. [5]

Progressive tax

Taiwan has implemented a progressive tax system for individual income taxes. For the 2017 tax year, the tax rates were as follows: [6]

Brackets (Unit NT$)Rate (%)
0 - 540,0005%
540,001 - 1,210,00012%
1,210,001 - 2,420,00020%
2,420,001 - 4,530,00030%
4,530,001 - 10,310,00040%
10,310,001 and over45%

Filing of individual income tax

By default, the tax year for all individuals and profit-seeking enterprises follows the calendar year. Income tax returns are due by May 31 of the following year, with no extension of time allowed. [5] Taxpayers, including foreigners, are able to complete and file their tax return electronically through software provided by the local taxing authority. [7]

Profit-Seeking Enterprise Income Tax

All profit-seeking businesses in Taiwan are subject to the Profit-Seeking Enterprise Income Tax. Sole proprietors and partners must file a return. However, their portion of the taxable income is reported on their individual income tax return. [8]

Income tax rate of profit-seeking enterprises

In 2010, the top tax rate was reduced from 25% to 17%, and the threshold below which no tax is owed was raised from NT$50,000 to NT$120,000. Therefore, the current profit-seeking enterprise tax rates are as follows: [8]

Taxable IncomeTax Rate
Below NT$120,0000%
Above NT$120,00017%

The amount of tax payable shall not exceed half of the amount of the taxable income in excess of NT$120,000.

Business tax (value-added tax)

Tax amount = (sales - purchases) * tax rate

In 2017, tax rate is 5%.

Securities transaction tax

This tax is paid by sellers of Republic of China securities at a rate of 0.3% of the gross proceeds from the sale of shares issued by companies. A rate of 0.1% applies on the gross proceeds of corporate bonds, however, an exemption has been put in place through 2016. [9] This tax is governed by the regulations set forth in the Securities Transaction Tax Act. [10]

Real estate speculation and the luxury tax

Aimed at cooling off real estate speculation that was driving up the cost of living in Taipei City and other urban areas, the Republic of China government implemented a new luxury tax in June 2011. The law imposes a 15% sales tax on owners of second homes who sell within one year of purchase. Additionally, a 10% sales tax is charged against properties sold after being owned for between one and two years. [11] Data provided by the Republic of China government in late 2011 showed that the luxury tax was having the desired effect, causing the average housing price in Taipei to fall nearly 12% while reducing overall volume of real estate transactions island-wide by nearly 15% in the June–October time period. [12]

Taxation of foreign investment

Uniform invoice lottery

First conceived in the 1950s, the Taiwan government created a uniform invoice system to encourage honest reporting of sales and prevent underpayment of taxes by businesspeople. To provide an incentive, the government launched a receipt lottery system. Each receipt is coded with an alphanumeric number, and every two months a lottery drawing is held with prizes ranging up to NT$10 million (approximately $335,000 USD as of February 2012) depending on how many numbers match. [13] The lottery is governed by the Uniform Invoice Award Regulations. [14]

Historical tax revenue statistics

20102009200820072006
Gross Tax Revenue1,565,8471,483,5181,710,6171,685,8751,556,652
Individual Income Tax304,686306,804389,744347,526334,330
Profit-Seeking Enterprise Income Tax285,701334,163445,245382,634311,888
Unit: NT$ million
Source: Guide to ROC Taxes 2011 [2]

See also

Notes and references

  1. (Taiwan), Ministry of Foreign Affairs, Republic of China (13 January 2016). "Taiwan tax revenues top US$62 billion in 2015 - Taiwan Today". Taiwan Today. Retrieved 10 April 2018.
  2. 1 2 3 "Chapter 1: A General Description of Taxation, Guide to ROC Taxes 2011" (PDF). ttc.gov.tw. Retrieved 10 April 2018.
  3. "Archived copy". Archived from the original on 2012-01-13. Retrieved 2012-01-25.CS1 maint: Archived copy as title (link)
  4. Income Tax Act, Laws & Regulations Database of the Republic of China. Retrieved 24 January 2012.
  5. 1 2 Introduction to Taiwan tax rules: Taiwan Pocket Tax Book 2011, Page 32. PricewaterhouseCoopers Taiwan. Retrieved 25 January 2012.
  6. "Chapter 2: Individual Income Tax, Guide to ROC Taxes 2011" (PDF). ttc.gov.tw. Retrieved 10 April 2018.
  7. "Taipei National Tax Administration, Ministry of Finance-e-Filing" Archived 2011-12-05 at the Wayback Machine Retrieved 25 January 2012.
  8. 1 2 Chapter 3: Profit-Seeking Enterprise Income Tax, Guide to ROC Taxes 2011
  9. Securities Transactions Tax Archived 2011-10-08 at the Wayback Machine , Taipei National Tax Administration
  10. Laws & Regulations Database and The Republic of China. Retrieved 26 January 2012.
  11. "Property market seen likely to recover after poll", Focus Taiwan News Channel. Published 15 January 2012. Retrieved 26 January 2012.
  12. "Luxury tax is bringing down prices, ministry says", Taipei Times. Published 16 December 2011. Retrieved 26 January 2012.
  13. "Unlucky bemoan single digit in invoice lottery" Taipei Times. Published 3 February 2012.
  14. Uniform Invoice Award Regulations, Laws & Regulations Database of the Republic of China. Retrieved 2 February 2012.

Related Research Articles

An income tax is a tax imposed on individuals or entities (taxpayers) that varies with respective income or profits. Income tax generally is computed as the product of a tax rate times taxable income. Taxation rates may vary by type or characteristics of the taxpayer.

New Taiwan dollar official currency of Taiwan

The New Taiwan dollar is the official currency of the Republic of China (ROC) used in the Taiwan Area. Formally, one dollar (圓) is divided into ten dimes (角), and to 100 cents (分), although cents are never used in practice. The New Taiwan dollars has been the currency of Taiwan since 1949, when it replaced the Old Taiwan dollar, at a rate of 40,000 old dollars per one new dollar. There are a variety of alternative names to the units in Taiwan. The unit of dollar is usually written in simpler form as 元. Colloquially, the currency unit usually called 塊 in Mandarin, 箍 in Taiwanese Hokkien, and 銀 in Hakka.

Taxation in the United Kingdom income tax

Taxation in the United Kingdom may involve payments to at least three different levels of government: central government, devolved governments and local government. Central government revenues come primarily from income tax, National Insurance contributions, value added tax, corporation tax and fuel duty. Local government revenues come primarily from grants from central government funds, business rates in England, Council Tax and increasingly from fees and charges such as those for on-street parking. In the fiscal year 2014–15, total government revenue was forecast to be £648 billion, or 37.7 per cent of GDP, with net taxes and National Insurance contributions standing at £606 billion.

Double taxation is the levying of tax by two or more jurisdictions on the same declared income, asset, or financial transaction. Double liability is mitigated in a number of ways, for example:

Ministry of Finance (Taiwan) Ministry of Finance of the Republic of China

The Ministry of Finance is the ministry of the Republic of China (Taiwan) responsible for government revenue, taxation, treasury, government land properties, customs in Taiwan. The current minister is Sheu Yu-jer.

Tax evasion is the illegal evasion of taxes by individuals, corporations, and trusts. Tax evasion often entails taxpayers deliberately misrepresenting the true state of their affairs to the tax authorities to reduce their tax liability and includes dishonest tax reporting, such as declaring less income, profits or gains than the amounts actually earned, or overstating deductions.

International taxation is the study or determination of tax on a person or business subject to the tax laws of different countries, or the international aspects of an individual country's tax laws as the case may be. Governments usually limit the scope of their income taxation in some manner territorially or provide for offsets to taxation relating to extraterritorial income. The manner of limitation generally takes the form of a territorial, residence-based, or exclusionary system. Some governments have attempted to mitigate the differing limitations of each of these three broad systems by enacting a hybrid system with characteristics of two or more.

The fiscal year begins on March 21 and ends on March 20 of the next year according to Iranian calendar. The Ministry of Finance and Economic Affairs is the government agency authorized to levy and collect taxes. In 2008, about 55% of the government's budget came from oil and natural gas revenues, the rest from taxes and fees. An estimated 50% of Iran’s GDP was exempt from taxes in FY 2004. There are virtually millions of people who do not pay taxes in Iran and hence operate outside the formal economy.

Taxation is one of the oldest functions of the Tanzanian government in running her affairs. By definition, a tax is a compulsory contribution from a person to the state to defray the expenses incurred in the common interest of all without any reference to the special benefits conferred. It is a compulsory contribution or payment for the support of governmental or other public purposes. The Tanzania Revenue Authority (TRA) is the government agency of Tanzania, charged with the responsibility of managing the assessment, collection and accounting of all central government revenue in Tanzania.

Taxes provide the most important revenue source for the Government of the People's Republic of China. As the most important source of fiscal revenue, tax is a key component of macro-economic policy, and greatly affects China's economic and social development. With the changes made since the 1994 tax reform, China has preliminarily set up a streamlined tax system geared to the socialist market economy.

The Uniform Invoice or Unified Invoice, better known as the Taiwan receipt lottery, is a form of state lottery managed by the Ministry of Finance of the Republic of China.

Due to the absence of the tax code in Argentina, the tax regulation takes place in accordance with separate laws, which, in turn, are supplemented by provisions of normative acts adopted by the executive authorities. The powers of the executive authority include levying a tax on profits, property and added value throughout the national territory. In Argentina, the tax policy is implemented by the Federal Administration of Public Revenue, which is subordinate to the Ministry of Economy. The Federal Administration of Public Revenues (AFIP) is an independent service, which includes: the General Tax Administration, the General Customs Office and the General Directorate for Social Security. AFIP establishes the relevant legal norms for the calculation, payment and administration of taxes:

This article refers to Taxation in Afghanistan.

Taxation in Norway is levied by the central government, the county municipality (fylkeskommune) and the municipality (kommune). In 2012 the total tax revenue was 42.2% of the gross domestic product (GDP). Many direct and indirect taxes exist. The most important taxes — in terms of revenue — are VAT, income tax in the petroleum sector, employers’ social security contributions and tax on "ordinary income" for persons. Most direct taxes are collected by the Norwegian Tax Administration (Skatteetaten) and most indirect taxes are collected by the Norwegian Customs and Excise Authorities.

Taxes in Germany are levied by the federal government (Bund), the states (Länder) as well as the municipalities (Städte/Gemeinden). Many direct and indirect taxes exist in Germany; income tax and VAT are the most significant. The German word for tax is die Steuer which originates from the Old High German word stiura meaning help. The Financial Secrecy Index ranks Germany as the 8th safest tax haven in the world, ahead of Jersey but behind Lebanon.

The policy of ‘’’taxation in the Philippines’’’ is governed chiefly by the Constitution of the Philippines and three Republic Acts.

Taxation in Bhutan is conducted by the national government and by its subsidiary local governments. All taxation is ultimately overseen by the Bhutan Ministry of Finance, Department of Revenue and Customs, which is part of the executive Lhengye Zhungtshog (cabinet). The modern legal basis for taxation in Bhutan derives from legislation. Several acts provide for taxation and enforcement only germane to their subject matter and at various levels of government, while a smaller number provide more comprehensive substantive tax law. As a result, the tax scheme of Bhutan is highly decentralized.

National without household registration is the legal status held by nationals of the Republic of China (ROC) who lack household registration in the Taiwan Area. ROC nationality law considers many overseas Chinese as well as most residents of mainland China, Hong Kong, and Macau to be ROC nationals. Such persons may be entitled to ROC consular protection and ROC passports. However, nationality is a necessary but insufficient condition for most civic duties and privileges in Taiwan. NWOHRs are subject to immigration control under the Immigration Act, and can only receive national health insurance if they have resided in Taiwan for at least one year in a two-year period. Although they may not vote, they are exempt from military conscription.

Taxes in Lithuania are levied by the central and the local governments. Most important revenue sources include the value added tax, personal income tax, excise tax and profit tax, which are all applied on the central level. In addition, social security contributions are collected in a social security fund, outside the national budget. Total tax revenues in Lithuania, including social security contributions, was only 27.5% of GDP in 2012, the lowest in the European Union.