IIT is levied on Taiwan-sourced income of both resident and non-resident individuals, unless exempt under the provisions of the Income Tax Act and other laws.
Individual income tax (IIT) rates
A non-resident alien residing in Taiwan for less than 90 days in a calendar year is subject to 18% WHT on salary remuneration received from a Taiwan-registered entity. Remuneration received from an entity registered outside of Taiwan is tax exempted.
A non-resident alien residing in Taiwan for more than 90 days but less than 183 days in a calendar year is subject to tax at a flat rate of 18% on Taiwan taxable salary income, regardless of where the remuneration is paid.
A resident alien is subject to the following progressive tax rates for 2019 IIT return filing:
|Taxable income (TWD)||Tax rate (%)||Less progressive difference (TWD)|
Income basic tax (IBT)
In addition to regular income tax calculations under the Income Tax Act, Taiwan also imposes IBT, at a flat rate of 20%, on individuals who are tax residents in Taiwan (including expatriates who stay in Taiwan for 183 days or more in a tax year). Foreign-sourced income is included in the calculation of IBT if the following criteria are met:
- The individual is a tax resident of Taiwan.
- Foreign-sourced income is equal to or more than TWD 1 million with basic income exceeding TWD 6.7 million.
Under the IBT Act, a taxpayer must calculate the amount of IBT due on income subject to IBT after adding back certain items and compare the result with the regular income tax payable. If the IBT payable is greater than the regular income tax payable, the taxpayer has to calculate and pay IBT based on the following formula:
- Income subject to IBT = Regular taxable income + add-back items
- IBT = (Income subject to IBT - TWD 6.7 million) x 20%
The add-back items include qualified insurance benefits, income derived from transaction of beneficiary certificates of privately-placed securities investment trust funds, non-cash charitable donations, and foreign-sourced income totalling TWD 1 million or more.
Note that although the inclusion of foreign-sourced income increases the IBT burden, any foreign taxes paid on foreign-sourced income may be credited against IBT payable, with certain limitations.