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Withholding Tax

Author: James Chang 107 views

Generally, withholding tax applies to:

  1. Most payments to foreign companies or individuals.
  2. Certain payments to recipients in Taiwan (employees, landlord, lawyer, CPA, etc.)

Natures of these two types are different:

1. Withholding tax on payments to foreign companies or individuals.​

Since the recipient of income is a foreign company or individual who would not file income tax return to Taiwan government, the Taiwanese payer company is required to withhold the tax payable of the foreign company/individual from the payment to him. Please note that the amount is deducted from the payment instead of additionally attached to the payment.

Rate
Nonresidents
Dividends21%
Interest20%
Royalties20%
Service fees20%
Filing and payment

The tax must be paid and return must be filed within 10 days from the payment.

2. Withholding tax on payments to recipients in Taiwan (employees, landlord, lawyer, CPA in Taiwan, etc.)

Although the income earners are tax resident in Taiwan and would file tax returns, the government prefers to collect the tax soon if the amount is material. In other words, if the amount of payment does not reach the threshold, the withholding tax is not applicable. The withholding tax is the provisional prepayment of the income earner’s individual income tax.

Rate
Residents
Salary5%
Rent10%
Fees of lawyer, CPA, and other professional practitioners10%
Payment

The tax must be paid before 10th of the following month of the payment. 

Filing

The return must be filed before 31 January of the following year of the payment.

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