Individual - Significant developments

Last reviewed - 25 August 2021

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.

Salary deduction amendment and additional long-term care special deduction

Salary deduction

Starting from 1 January 2019 onwards, individuals may elect to use either (i) fixed salary deduction (currently TWD 200,000) 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.

Long-term care special deduction

The newly introduced long-term care special deduction is TWD 120,000 per person per year effective from 1 January 2019 if prescribed conditions are met.