Get to know the author
Whether you’re drawn to Taiwan because of its rich culture, subtropical climate, affordable cost of living, or soon-to-be-launched digital nomad visa, taxes in this country probably aren’t the first thing you think about when planning your new life abroad.
Nonetheless, they’re important to consider because, after all, planning for taxes now can help ensure an easier filing process and a lower bill in the future.
We know how hard it can be to find informative yet digestible information on expat taxes. So, we’ve put together a brief (but thorough!) Taiwan tax guide below. Learn what your tax obligations are as a US expat living in Taiwan, how to avoid double taxation, and more.
Snapshot of taxes in Taiwan
- Primary tax form(s): Individual income tax return
- Tax deadline: May 31st
- Reporting website: National Taxation Bureau eTax portal
- Administrative language(s): Mandarin Chinese
- US/Taiwan tax treaty? No
- US/Taiwan totalization agreement? No
Understanding Taiwan’s tax system and deadlines
Taiwan’s governing tax body is the National Taxation Bureau under the Ministry of Finance. Among other things, they are responsible for:
- Administering & collecting taxes
- Enforcing & ensuring compliance with tax laws
- Preventing & prosecuting financial crimes
Foreigners who stay in Taiwan for 183 days or more per year must file personal income taxes. Foreigners who are there for 90 days or fewer per year generally don’t need to report their income unless they’ve earned capital gains income derived from Taiwan.
Foreigners who are there for more than 90 days but fewer than 183 days must report any income they’ve earned from abroad while providing services in Taiwan. Non-tax residents who must report their income or want to claim a Taiwan tax refund file a nonresident income tax return.
Taxes for a given calendar year must generally be filed and paid by May 31st of the following year. If this deadline falls on a weekend or national holiday, it shifts to the next business day. Filing past this date can result in penalties and interest.
You can file online with the eTax portal or bring a copy of your completed tax return and payment to your district’s National Taxation Bureau.
Determining Taiwanese tax residency & liability
Foreigners who stay in Taiwan for 183 days or more in a year meet the definition of residency for tax purposes. Those who stay for less than that amount of time are considered non-residents.
Taxation of income in Taiwan
The way Taiwan taxes foreigners depends primarily on whether or not they are tax residents.
Tax residents
In Taiwan, the tax percentage you pay increases as your income does. For foreigners who qualify as Taiwanese tax residents, these marginal progressive tax rates range from 5% to 40%:
Taiwan income tax rates, 2024
| Net Taxable Income (NT$) | Net Taxable Income (USD) | Tax Rate | Progressive Difference (NT$) | Progressive Difference (USD) |
| Up to 590,000 | Up to ~$18,273 | 5% | 0 | $0 |
| 590,001 – 1,330,000 | ~$18,273 – $41,192 | 12% | 41,300 | ~$1,279 |
| 1,330,001 – 2,660,000 | ~$41,193 – $82,385 | 20% | 147,700 | ~$4,575 |
| 2,660,001 – 4,980,000 | ~$82,386 – $154,239 | 30% | 413,700 | ~$12,813 |
| 4,980,001+ | ~$154,240+ | 40% | 911,700 | ~$28,237 |
Note that the “progressive difference” helps simplify the process of calculating your income tax.. Typically, your income tax in a progressive income tax system is calculated by determining your tax liability for each band of income and then adding the bands together.
But using the progressive difference amount as a reference, you insteadcalculate your tax liability by applying the tax rate related to your total taxable income amount and subtracting the corresponding progressive difference, thereby arriving at your true income tax amount.
Example: Jonah works in Taiwan as an English teacher and earns NT$1,500,000 (~$46,458). His tax liability is:
- 5% for the first NT$590,000 of his income (NT$29,500), plus
- 12% for the portion of his income between NT$590,001 & NT$1,330,000 (NT$88,800), plus
- 20% for the portion of his income between NT$1,330,001 & NT$1,500,000 (~NT$34,000)
In total, his tax liability is NT$152,300 (~$4,717).
Using the progressive difference method, he can also get to this number by calculating:
- 20% of his overall income of NT$1,500,000 (NT$300,000), minus
- The progressive difference for his highest marginal tax bracket (NT$147,700)
Income Basic Tax (IBT)
The Income Tax Act of 2021 established an income basic tax (IBT) in Taiwan, which is essentially an alternative minimum tax (AMT). Those subject to the IBT pay a flat tax of 20% on their basic taxable income. This tax ensures that those with high incomes and significant deductions pay a minimum amount in taxes.
To calculate your basic taxable income, you’ll add your regular taxable income to your exempt income items, which include:
- Capital gains from sales of securities
- Insurance payouts
- Foreign-sourced income, when it exceeds NT$1,000,000 & basic income exceeds NT$7,500,000
Once you calculate your basic taxable income, you’ll subtract NT$7,500,000 from it and multiply it by 20% to get your IBT liability.
If your IBT liability is higher than your tax liability under the standard progressive rates, you will pay the IBT liability. If your IBT liability is lower than your tax liability under the standard progressive rates, you will pay your standard tax liability.
Non-tax residents
Non-tax residents’ Taiwanese tax liability depends on how much time they’ve spent in the country in a given year:
- In Taiwan for 90 days or fewer: 18% withholding tax on Taiwan-sourced income; foreign-sourced income exempt
- In Taiwan for over 90 but fewer than 183 days: 18% withholding tax on all income, regardless of where that income comes from
Both of these categories must report their income and calculate their tax liability on a nonresident income tax return before leaving the country.
Deductions & allowances
Taiwanese tax residents, including those who are also US expats, may qualify for several different tax deductions and allowances.
The standard deduction is NT$131,000 (~$4,057) for single filers and NT$262,000 (~$8,115) for married couples filing jointly.
Alternatively, they may also choose to itemize deductions. Among the more common itemized deductions include:
- Contributions & donations: Contributions and donations made to educational, cultural, public welfare, or charitable causes up to 20% of gross consolidated income
- Insurance premiums: Premiums paid for life insurance, labor insurance, national pension insurance, and insurance for military members/teachers/public servants up to NT$24,000 (~$743). There’s no limit to the deduction for national health insurance
- Medical & childbirth expenses: Expenses charged by certain hospitals and clinics. Portions paid by insurance are not eligible for deduction
- Salaries/wages: Salaries/wages up to NT$218,000 (~$6,752) per person per year
- Savings & investment: A special deduction for savings allows tax residents and their dependents to deduct interest from certain savings accounts, trust income, transfer earnings/dividends, gifts, and stock up to NT$270,000 (~$8,362)
- Disability: Deduction of up to NT$218,000 (~$6,752) per person per year
- Rent: Residential rent up to NT$180,000 (~$5,575) per tax return per year
- Note: Only available to non-homeowners and those whose income falls below certain thresholds
Other taxes in Taiwan
Property taxes
A few different taxes associated with residential property in Taiwan include:
- Property transfer tax: 6%
- Building tax: 1.2% to 2%
- Land value tax: .2%
Social security taxes
There are three main types of mandatory social security taxes in Taiwan, including:
- Labor Insurance Program (LIP): 2.2% of employee’s monthly salary up to NT$45,800 (~$1,419)
- National Health Insurance Program (NHIP): ~1.6% of employee’s monthly salary up to NT$150,000 (~$4,646)
- Labor Pension Program (LPP): Voluntary contribution toward a personal pension of at least 6% of monthly salary up to NT$150,000 (~$4,646)
- Note: Foreign nationals aren’t eligible to contribute toward pensions unless they also hold Taiwanese nationality
B!T note: Taiwan doesn’t have a totalization agreement, so US expats living there may be subject to social security taxes to both the US and Taiwan.
VAT
The VAT tax in Taiwan (aka sales tax) is 5% and is charged by businesses on the sale of most goods and services then remitted to the National Taxation Bureau.
B!T note: Certain small businesses may also need to pay a gross business receipts tax (GBRT) of 1% to 5%, depending on their industry.
Estate tax
Taiwan levies an estate tax at the following rates:
| Taxable Estate (NT$) | Taxable Estate (USD) | Tax Rate | Progressive Difference (NT$) | Progressive Difference (USD) |
| Up to 50,000,000 | Up to ~$1,548,585 | 10% | 0 | $0 |
| 50,000,001 – 100,000,000 | ~$1,548,586 – $3,097,170 | 15% | 2,500,000 | ~$77,429 |
| 100,000,001+ | ~$3,097,171+ | 20% | 7,500,000 | ~$232,288 |
Estate tax exemptions exist for surviving spouses and parents, lineal descendants, disabled heirs, dependent siblings and grandparents, and funeral expenses.
The maximum amount any one individual can exempt from taxation is NT$13.33 million (~$412,853).
US taxes for expats in Taiwan
Due to the US’s citizenship-based taxation system, all American citizens and US permanent residents — even those who live abroad — are subject to US taxes. If you earn above a certain threshold, you must file (and potentially pay) federal income taxes.
Americans abroad receive an automatic two-month tax extension to June 15th. You can extend that deadline further upon request to October 15th. That said, you’re still responsible for paying any anticipated taxes due by April 15th.
American citizens and permanent residents who are also subject to taxation in Taiwan risk being taxed on the same income by two different governments. Fortunately, there are often ways to mitigate this risk.
There is currently no Taiwan/US tax treaty in force, although the Taiwan Tax Agreement Act of 2023 in the US did clear a path for one in the near future. That said, tax treaties often offer limited benefits to certain groups only, due to a tricky saving clause. Regardless, US expats living in Taiwan can still claim other tax benefits to reduce their tax liability.
A couple of the most popular tax benefits for US expats include:
The Foreign Tax Credit (FTC)
The FTC allows Americans to claim dollar-for-dollar US tax credits based on any foreign income taxes they’ve paid. Essentially, this lets you “subtract” what you’ve paid in foreign income taxes from your tax due in the US.
If your Taiwan tax rate is higher than your US tax rate, this typically not only eliminates your US tax liability but can offer you carryover credits. You can use these credits on future US tax bills for up to ten years.
To qualify for the FTC, foreign taxes must be:
- a) legal
- b) based on income
- c) charged to you specifically, and
- d) paid or accrued.
The Foreign Earned Income Exclusion (FEIE)
The FEIE lets Americans who meet either the Physical Presence Test or Bona Fide Residence Test exclude a certain amount of their foreign-earned income from US taxation. Passive income (like rental income, dividends, trust fund distributions) is not eligible for exclusion under the FEIE.
The maximum exemption limit increases a bit each year to account for inflation. For tax year 2023, the FEIE limit was $120,000; for tax year 2024, it will be $126,500.
Pro tip: Qualifying for the FEIE also makes you eligible for the Foreign Housing Exclusion. Under the FHE, you can offset the costs of certain foreign housing expenses like rent, utilities, and residential parking.
Reporting obligations
While US expats are eligible for a couple of unique tax breaks, they may also need to file additional dislcosures related to their foreign financial circumstances. This may includes the:
- Foreign Bank Account Report (FBAR): Any American with over $10,000 held in foreign financial institutions must file FinCEN 114, aka the FBAR. Note that this threashold refers to the total amount you have in foreign financial accounts — not just in one account.
- Statement of Specified Foreign Assets (Form 8938): Americans abroad with over $200,000 in foreign assets on the last day of — or over $300,000 in foreign assets at any point during — the tax year must file Form 8938.
- Note: The reporting thresholds vary for married couples filing jointly and filers based in the US.
Resources:
- Q1：When are foreigners required to file their income tax returns in the Republic of China (R.O.C.)?
- Q3：Where can foreigners file their income tax returns?
- Taiwan – Individual – Residence
- Individual Income Tax
- Taiwan – Individual – Taxes on personal income
- Property Tax in Taiwan
- Social security in Taiwan
- Taiwan – Corporate – Other taxes
- Taiwan – Individual – Other taxes
