Individual - Significant developments

Last reviewed - 02 February 2024

Tax incentives for foreign expatriates

Starting from tax year 2018, the Act for the Recruitment and Employment of Foreign Professionals provides preferential tax treatment for foreign individuals who have obtained the Employment Gold Card or Foreign Special Professional Work Permit and are approved to reside in Taiwan for the purpose of work for the first time.

If a foreign special professional meets both of the following criteria, 50% of the salary income in excess of 3 million new Taiwan dollars (TWD) is exempt from Taiwan income tax and non-Taiwan source income is excluded from the calculation of the individual’s income basic tax (IBT):

  • The individual stays in Taiwan for 183 days or more in a calendar year.
  • The individual's annual Taiwan-sourced salary income is in excess of TWD 3 million.

The tax incentive can be applied for five consecutive years from the first year that the foreign special professional meets both requirements. 

Salary deduction

Starting from 1 January 2019 onwards, individuals may elect to use either (i) fixed salary deduction (currently TWD 207,000) or (ii) specific expense deduction to calculate taxable salary income, whichever is more beneficial.

Under the specific expense deduction regime, three prescribed expense categories can be deducted from salary income. The prescribed expense items shall be incurred directly in relation to the provision of services by the individual and should be actually borne by the income recipient. The specific expense deduction is limited to 3% of total salary income for each expense category per person per year.

Resume taxation on capital gain derived by resident individuals from disposal of shares in non-listed or non-OTC companies effective 1 January 2021

The Legislative Yuan passed amendments to Articles 12 & 18 of the Income Basic Tax (IBT) Act, effective 1 January 2021, to resume taxation of capital gain derived by resident individuals from disposal of shares in non-listed or non-OTC companies (including certificate of entitlement to new shares, payment certificate for share consideration, or document of title to shares, etc.), which shall be included in the IBT tax base and subject to IBT.

However, to foster the development of innovative start-up companies and industrial transformation, disposal of shares in domestic high-risk innovative start-up companies that have been established for no more than five years may be exempt from the aforementioned regulation, subject to approval from the central competent authority.