Being an American Expat abroad can be a scary prospect when it comes to taxes. Worldwide banks have implemented FACTA reporting which means that big brother knows how much money you have overseas for accounts you opened using your American passport. Also, the USA is one of the few countries that exercises a worldwide tax system.
But don’t let those things get you down! The overseas exemption is pretty high (102,000 USD as of 2017) and if you make more than that you should be investing some money into to a professional to do your taxes for you anyway. If you are making lower than that, filing your taxes is easy!
Also there is the foreign income tax credit and the additional child tax credit which can help to cancel out any tax payable.
You may try to file taxes online using Turbo Tax or something similar, but once you declare you have an overseas bank account, you will run yourself into trouble. The tax software will only be able to process this if you pay an extra $50 or something for the “professional version.” Who wants to pay $50 on a tax form that you are declaring nothing on, right?
The simple and free solution is to send in your tax form via pencil and paper. The government has made this relatively simple for us foreigners abroad. And they give us an extra 3 months to file! Below is a rough guide on completing your taxes via pencil and paper from overseas.
The expat deadline for filing taxes from overseas is automatically moved back to June 15th of the following year. But you can use form 4868 to extend the filing date to October 15.
Paper and Pencil Tax Filing Guide
Disclaimer: I am not a professional in US tax. Below is simple a guide that follows the tax instructions given by the IRS. If you have complex overseas tax issues, I would suggest you seek professional advice. If you file yourself, you need to read the IRS instructions carefully and make sure you do not misreport anything. I cannot take responsibility for any tax misfiling on your part..
With that in mind, I am going to assume that you are:
If you do have children, then I do not recommend claiming for foreign income tax exclusion. You should file form 1116 foreign income tax credit and schedule 8812 the additional child tax credit. In most circumstances with children you will be receiving a tax refund without any tax payable.
I will walk you through the following 6 steps:
Bonus steps if you will not use the foreign income exclusion:
1. Fill out form 1116
2. Fill out schedule 8812
3. Fill out schedule 3
Step 1: Fill Out Schedule B of Form 1040
Yes, before you even start on Form 1040, you need to begin with Schedule B of Form 1040. This is because you have a foreign bank account; you must declare it as well as other foreign assets. Because of FACTA, the US has forced banks worldwide to share the account information of American citizens. Big brother knows, so you might as well declare.
Click here for Schedule B instructions and here for the Schedule B itself. Be sure to print it out and read the instructions carefully.
Tax season is here. In Taiwan, taxes must be filed from before May 31st. As a foreigner, you might be wondering how to file a tax return and what the regulations are. Luckily Taiwan has made it easy by creating an online tax filing system that you can complete from your computer, although you do still have to physically send some forms to the tax office. Let us answer some common questions about tax filing that might come up:
Forward: The following is Q+A for tax year 2020 only, based on information provided on Taiwan's Ministry of Finance website for your reference only. Personal income tax can be a complicated issue; for specific answers regarding your tax situation please contact the Taiwan tax office: +886-2-2311-3711. Press 7 for English service. The ultimate decision for tax payable is up to the discretion of the Taiwan tax office.
Q: When should I file Taxes?
A: Between May 1st to May 31st after the tax year (tax year is same as calendar year). However due to COVID-19, the tax filing deadline has been extended to June 30th, 2021 for 2020 tax returns.
If you are leaving the country and do not plan to return to Taiwan, you must file an early tax return within 10 days before you leave. We recommend going to the tax office in person for an early filing.
Q: When are Taiwan tax payments due?
A: Tax payments are due by June 3rd, after which there will be penalties for late payments. However due to COVID-19, the tax filing deadline has been extended to July 3rd, 2021 for 2020 tax returns.
Q: What makes me eligible for paying Taiwan taxes (or what makes me a tax resident)?
A: You become a Taiwan tax resident if you stay in Taiwan longer than 183 days, or you are a Taiwan national and have household registration（戶籍） in Taiwan and visit for at least one day. The address in your ARC is not household registration, it's a registration process from the local administrative office (戶政事務所）.
If you stay less than 90 days in Taiwan, in general you do not have to file taxes, and VAT or sales taxes are reimbursable.
If you worked in Taiwan and stayed over 90 days, you need to pay taxes on your Taiwan based salary even if your income came from overseas.
If you stayed in Taiwan between 90-183 days in a calendar year then you need to pay a fixed rate of 18% income tax （your company may have deducted this from your salary already).
If you have Taiwanese dual citizenship and Taiwanese house registration, then you need to pay taxes if you have stayed in Taiwan for over 31 days. Days are cumulative in a tax year, and it doesn't matter what you came for during these days.
Q: How do I count the days I stayed in Taiwan?
A: Please note that the day you come to Taiwan doesn't count, but the day you leave does. It's a good idea to keep track of the number of days you have been in Taiwan via the stamps on your passport.
Q: What is the income tax rate?/ How much is Taiwan tax?
A: The income tax rate for non-residents who earn at least 1.5 the minimum wage per month (34,650 NT as of 2020) is 18% (you can get a tax refund if you pay 18% taxes and then become a tax resident). This tax rate is usually applicable for most white collar foreigners.
For non-residents who earn less than 1.5 the minimum wage per month (34,650 NT as of 2020), the income tax rate is 6%. This tax rate is usually applicable for most blue collar foreign workers. 18% usually is applicable to white collar foreign workers.
The 2020 tax rate for residents (staying over 183 days in Taiwan) is as follows (source: Taiwan Ministry of Finance):
Filing taxes in a foreign country can be a scary prospect. However, Taiwan makes it easy by providing many tools and resources such as the E-file system. This is not a comprehensive guide, but is written to help give you an idea of how to file taxes online and avoid unnecessary confusion.
A complete guide to the system can be found here although the whole thing is in Chinese. Here is a simple guide they have provided in English.
Filing online will require a basic understanding of Chinese characters (at least your own name, address, etc.). If you know no Chinese, either get a friend to help you or just file in person at the Tax office. Filing in person doesn't take long either, but it may be far away and you will have to wait in line. You can also hire an accounting firm or law firm to help.
For the government's e-filing guide FAQ, click here.
For our full FAQ regarding income tax for foreigners in Taiwan, click here.
Okay, let's get started. The first thing you need to do is download the E-filing software here.
The photo sample above was taken from the National Development Council website.
On February 8th, 2018, Taiwan rolled out the Act for the Recruitment of Foreign Professionals, which included the employment gold card four-in-one visa to entice foreign special professionals to come and seek work opportunities in Taiwan. Details and common questions about this new type of visa/work permit can be answered below.
Please note that this blog not a comprehensive guide but only gives basic information about the gold card based on the information on the National Development Council website.
Q: What is the Taiwan employment gold card?
A: The employment gold card is a four-in-one visa, work permit, alien resident certificate, and re-entry permit. It also provides other benefits to foreigners as mentioned below.
Q: What benefits does Taiwan's employment gold card have?
A: The benefits associated with the employment gold card or special professional work permit are as follows:
Q: Who can apply for and obtain Taiwan’s employment gold card?
A: Foreigners that are specialists in their field. This includes Taiwan dual citizens and citizens of Macau and Hong Kong.
Q: Who can qualify for the tax benefits under the employment gold card?
A: Foreign nationals or dual citizens that have stayed over 183 days in Taiwan in a calendar year for the first time in 2018 or later.
Q: What are the requirements for the employment gold card?
A: The full requirements for foreign special professionals can be found here.
The exact requirements vary by industry. However, the requirements generally require that an applicant show that they are a special professional or senior professional that has made special contributions to their field of work or received national recognition in one of the following 8 accepted professional industries:
1. Science and technology
5. Culture and Arts
8. Architectural Design
Q: Does the exemption from tax on overseas income (alternative minimum tax, or AMT) for the Taiwan gold card only last for the first three years?
A: Yes, this tax benefit only lasts three years, the same as the tax benefit for 50% of income above 3 million.
Q: How is the three years calculated for tax benefits for AMT and 50% of income above 3 million?
A: The three years start from the first tax year in which the foreign professional becomes a tax resident (stays for 183 days or more in a calendar year). However, if the foreign professional does not meet the qualifications for tax resident, they can defer this tax benefit to the following year, but no longer that five years after the work permit or gold card was first issued.
Q: How is the 50% of income above 3 million NT calculated if I am filing jointly with my spouse?
A: In this case the 50% of taxable income above 3 million NT only applies to your income. You cannot use this tax benefit for your spouse unless he/she also has a gold card.
Q: If I apply for a gold card but I am not a tax resident, when will the three years expire?
A: As explained above, you can defer the 3 year tax benefits to future years, but no longer that five years after the work permit or gold card was first issued.
Q: If I meet the 160,000 NT per month salary requirement, can I get a gold card?
A: Not necessarily. You also need to prove that you are a special professional in your field. In general this means proving your past work experience and awards to the government.
Q: Can I still get a Taiwan employment gold card without meeting the 160,000 NT salary per month requirement?
A: You can bypass the 160,000 NT per month requirement if you meet other requirements proving you are a special professional in your field.
Q: How will my dependents get visas?
A: As long as you have first been approved for your gold card or special professional visa, your dependents will be able to receive their dependent visas. If they enter Taiwan using the visa free program, they will need to come on the same flight as you, otherwise they will have to leave Taiwan and receive their dependent visas at the Taiwan office overseas, or receive them before they leave if you are coming on different flights.
Q: If I switch from a normal ARC to an employment gold card, will my dependent's visas be affected?
A: No, there will be no changes to your dependent's visas.
Q: How many year of experience do I need for the employment gold card?
A: Typically at least 5.
Q: How long does it take for the government to approve a gold card application?
A: After the application is submitted, it will take about 1 month to receive an approval or rejection. Please also note that there is a government fee associated with each application.
Q: What is the difference between an employment gold card and a work permit for a foreign special professional applied by a Taiwan company?
A: They are basically the same, both have the same tax benefits, but the differences are as follows:
Foreword: Please note that this is not a comprehensive list of questions. This is meant to only give a basic overview of Taiwan's business environment to those who have not yet been to there.
What is the corporate tax rate in Taiwan?
20% as of 2018.
What is the VAT rate in Taiwan?
What is the withholding tax rate in Taiwan?
Typically it is 20% for sending funds overseas. For tax treaties, please click here.
For other types of withholding tax (can be 0.1-15). For further information please consult with a tax adviser, such as Grant Thornton Taiwan.
What is the personal income tax like?
Please find our article on the subject here.
Are transfer pricing reports required in Taiwan?
Yes, if your group entity in Taiwan has made over 300 million NTD total annual revenue. For more information, consult with a tax advisory firm such as Grant Thornton Taiwan.
How do you start a Taiwan business/company?
Please see our article on the subject here. There is also a website and book about this subject here. You can also consult an accounting or law firm such as Grant Thornton Taiwan for a price quote on their company setup services.
How much does it cost to start a company in Taiwan?
As much as you need to cover operating costs. If you need to hire foreigners, your paid in capital should be over 5 million NT.
How do you hire foreigners in Taiwan?
You need to have a company with starting capital of 5 million NT or more.
What business licenses are required in Taiwan?
This depends on the business. For food related products and medicine, Taiwan FDA approval is required.
How do I get FDA approval in Taiwan?
You should consult with a law firm for help on this.
Is a corporate secretary required in Taiwan?
Is bookkeeping/payroll required in Taiwan?
Yes. You can use service from a local accounting firm or other provider such as Grant Thornton Taiwan.
What statutory requirements are there in Taiwan?
Labor insurance, health insurance, and pension.
What is the rate for overtime in Taiwan?
This is complicated, but it is at least time and a half for a weekday.
What are Taiwan labor standards?
Please see our article here on Taiwan’s Labor Standards Act.
Does Taiwan have a good talent/labor market?
Yes, there are many bilingual talented people here, and many are underemployed because of lack of opportunity.
How do I find talent in Taiwan?
The best way is to use your connections, but you can also try Taiwan work finding websites:
The most popular work finding website in Taiwan, although the interface is only in Chinese (sorry), job postings can be in English. Its worth checking out, even if you can’t read Chinese (perhaps you can have a Chinese friend help you out).
This is probably the second most popular work finding site in Taiwan, this websites interface is also only in Chinese, although some job postings are in English.
This is a great English based website for English Teaching jobs in Taiwan.
Linkedin has Taiwan job opportunities that are mostly in English.
Other than these, search Google. Who knows what you’ll find.
What are the biggest companies in Taiwan?
Foxconn, TSMC and Pegatron, Quanta Computer, and Cathay Life Insurance are the biggest companies in Taiwan. Other companies include Acer, Asus, and HTC.
What is Taiwan's economic situation like?
Please see our economic FAQ here.
Please like, comment, and share!
Also, feel free to contact us with any specific questions about doing business in Taiwan.
We are US Expats that have extensive experience living, working, and travelling in Taiwan. In our day, we had to learn many things about Taiwan the hard way. But we have come to learn that Taiwan is one of the best places in the world for Foreigners to live. Our blog does not represent the opinions of every foreigner in Taiwan. We are just trying to help others learn more about this beautiful country.