Taiwan, China: Business Environment
GBRT is levied at the following rates:
A “luxury tax” is imposed on the sale, manufacture and import of certain goods and services (i.e. passenger vehicles, yachts, aircraft, helicopters and light vehicles that cost more than NTD 3 million; furniture; and non-refundable memberships that cost more than NTD 500,000) at a rate of 10% or 15% of the total price (including necessary charges, commodity tax, VAT and customs duty).
Start-up expenses during the start-up period can be deducted in the year incurred, same as for the interests on loans that are used for business purposes. However, for a loan from a non-financial institution, the interest rate shall not exceed 15.6%/year.
Losses on bad debts can be deducted when certain legal proceedings or time requirements have been satisfied. The loss should first be charged against the bad debt provision, which should not exceed either 1% of accounts receivable and notes receivable outstanding, or the actual average bad debt ratio for the past three years.
Certain charitable contributions are not subject to any tax limit (national defence, morale of troops, contribution to government, etc.), while others are subject to various limits under the relevant regulations.
Fines and penalties are not tax-deductible.
Taiwanese companies and branches of limited partnerships can claim a tax credit of 15% (capped at 30% of taxable income obtained in a tax year) for their R&D expenditure. A tax credit for smart machinery, cyber security products or services and 5G system implementation expenditures can apply.
Tax incentives are available for investors located in prescribed areas (science parks, export processing zones, free-trade zones, etc.) or active in certain sectors (like biotech).
A real property transfer tax applies to all properties acquired on or after 1 January 2016, at a rate of 20% on Taiwanese corporate taxpayers or 35% on profit-seeking enterprises with foreign head offices located outside of Taiwan (45% if the property is held for less than a year). The taxable base is the market value of the properties reduced by related costs, expenses, and the increase in government-assessed land value for LVIT purposes.
Deed tax is imposed on the transfer of buildings, at rates ranging from 2% to 6% based on the deed price of the property as prescribed by the local real property assessment committee.
A tax is levied on securities transactions (with the exception of government bonds) at the rate of 0.3% on gross proceeds from the sale of domestic shares (reduced to 0.15% for day-trade transactions through 2024) and at varying rates between 0.0000125% and 0.6% on futures transactions.
Stamp duties are imposed on certain documents, with rates between 0.1% and 0.4% of the taxable basis.
Capital duty does not exist officially; however, a lump-sum fee of NTD 1,000 or 1/4,000 of the capital (whichever is higher) is levied upon capital subscription.
Although there is no social security tax in Taiwan, factories, mines and all companies with 50 or more employees must establish funds for employee welfare. There are two social security programs: Labor Insurance (10.5% on the employee's monthly insured salary up to TWD 45,800, with an additional 1% levied for unemployment insurance - the employer is required to contribute 70% of this premium); and National Health Insurance (5.17% of an employee's monthly insured salary, up to TWD 182,000 - 60% of such premium is borne by the employer). Furthermore, employers are required to contribute 6% of an employee’s monthly salary to employees’ pension accounts at the Bureau of Labor Insurance (monthly salary cap of TWD 150,000).
Taiwan, China | East Asia & Pacific | United States | Germany | |
Number of Payments of Taxes per Year | 11.0 | 22.9 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 221.0 | 198.0 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 34.5 | 33.9 | 36.6 | 48.8 |
Latest available data.
Individuals income tax | Progressive rate from 5% to 40% |
From NTD 0 to 560,000 | 5% |
From NTD 560,001 to 1,260,000 | 12% |
From NTD 1,260,001 to 2,520,000 | 20% |
From NTD 2,520,001 to 4,720,000 | 30% |
Above NTD 4,720,000 | 40% |
Alternative minimum tax (AMT) | flat rate of 20% taxpayers must calculate the amount of AMT due on income subject to AMT after adding back certain items and compare the result with the regular income tax payable: if the AMT payable is greater than the regular income tax payable, the taxpayer has to calculate and pay AMT based on a specific formula: (income subject to AMD - NTD 6.7 million) x 20% |
A resident alien is eligible for a personal exemption of TWD 92,000, plus TWD 92,000 for the spouse and each dependant (TWD 138,000 for dependants over 70 years of age). A non-resident alien is not eligible for any personal exemptions.
Further deductions are provided for: salaries or wages (capped at TWD 207,000/person), interest earned from bank deposits (up to TWD 270,000 per tax filing unit), disabled or handicapped individuals (TWD 207,000/person), dependent child tuition (TWD 25,000 per child), losses from property transactions, etc.
Subsidies, allowances, incentives, or compensation provided by the government to individuals affected by COVID-19 shall be exempt from income tax.
A non-resident taxpayer is not entitled to personal exemptions and deductions. Click here to consult the scope of application for tax preferences provided to foreign professionals.
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Latest Update: April 2023