Taiwan: Living There - Tax Issues

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Living There

INDIVIDUAL TAXATION

Residents are taxed on their worldwide income. Foreigners staying in Taiwan for at least 183 days in a calendar year are taxed as residents. Married couples are generally taxed jointly but a couple can opt for separate taxation.

INCOME TAX

Income is taxed at progressive rates.

There is a basic exemption of TWD74,000 (US$2,335) for each taxpayer, spouse and dependent and a TWD111,000 (US$3,503) exemption for each dependent who is the taxpayer's lineal ascendant and over 70 years of age.

Standard deduction is TWD44,000 (US$1,389) for single individuals and TWD67,000 (US$2,115) for each married couples filing a joint return. Interest paid for a loan for an owner occupied dwelling is also deductible from taxable income, although limited to a total of TWD300,000 (US$9,468).

CAPITAL GAINS TAX

Capital gains are treated as regular income and taxed at progressive rates. The taxable gain is the difference between the selling price and the property cost (acquisition costs, improvement costs, transfer costs).

Land Value Increment Tax

Gains for the sale of land are exempt from income tax but are taxed under the Land Value Increment Tax (LVIT). The tax base is the increased value of the property which is computed by deducting the acquisition costs and improvement costs from the property’s market value at the time of the transfer. The taxable gain is adjusted to take account the changes in the consumer price index. The rates of the land value increment tax range from 40% to 60%, depending on the taxable gain. For owner-occupied residential land, this tax is levied at a flat rate of 10% under certain conditions.

PROPERTY TAX

House Tax

The owner of a house for residential use is taxed annually at a rate of 1.38% of its current assessed value. The tax rate is determined by the county (province) or city government as approved by the local people’s assembly.

Land Value Tax

This tax is levied on the value of land, as assessed by the government. Land tax is computed from comparing the starting cumulative value (SCV) and the current assessed land value (LV) and taking the difference between them using a confusing formula. The SCV is a constant figure set by the government for each province or municipality, LV is likewise assigned by the Government. Both values are updated every three years. Land for residential use is taxed at a flat rate of 0.2%. Land used for other purposes is taxed at progressive rates, ranging from 1% to 5.5%.

Taiwan - more data and information

• Lawyers (attorneys) with property law practices in Taiwan

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