Taiwan Adjusts Non-Resident Withholding Tax Threshold

by Mary Swire, Tax-News.com, Hong Kong

22 December 2011

Following an increase in the minimum wage in Taiwan, the monthly salary threshold of the 6% withholding tax rate for non-residents in the country will be increased to TWD28,170 (USD930) from January 1, 2012.

The monthly salaries of Taiwanese non-residents are subject to a tax, to be withheld by their employers, of either 6% or 18%. If their monthly salary is equal to, or less than 1.5 times the minimum wage, as assessed by the government, the withholding tax is 6%. If the monthly salary is greater than that level, the tax rate is 18%.

The minimum monthly wage assessed by the government for 2011 was TWD17,880. On January 1, 2012, however, the assessed minimum wage will be increased to TD18,780 monthly. Therefore, if the monthly salary payable to non-residents payable is more than TWD28,170, the withholding tax rate will be 18%.

The National Tax Administration has reminded employers that they should be aware of the adjustments of withholding regulations for non-residents in 2012. The payment of excess withholding taxes will obviously affect the tax rights of their employees.

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