Nonresidents, individuals who were in Taiwan for less than 183 days during a calendar year, are taxed on their Taiwanese-sourced income.

Married couples are generally taxed jointly, but a couple can opt for separate taxation. A taxpayer, his spouse, and dependents are generally considered as a single tax unit and their incomes are generally consolidated on a single tax return.

Income Tax

Income earned by nonresidents is generally taxed at a flat rate of 18%, withheld at source. No exemptions and deductions are allowable. Some specific types of income may be subject to different tax rates. Employment income (wages and salaries) is subject to an 18% withholding tax rate. Investment income (dividends, commissions, rental income, royalties, professional fees) is subject to a 20% withholding tax rate.

Rental Income Tax

Gross rental income earned by nonresidents is taxed at a flat rate of 18%. Rental income is also liable for either Value Added Tax (VAT) or Business Turnover Tax.

Value Added Tax (VAT)

Value Added Tax (VAT) is 5% of gross rental income. Business Turnover Tax of 1% may be charged for small-scale enterprises in lieu of VAT if rent is paid directly to an individual, not a company.

Capital Gains Tax

Capital gains on the sale of properties are subject to income tax 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). Tax is computed based on incremental increases in the assessed value of the land from the last transfer. The tax rate varies from 20% to 40%.

Once the Land Value Increment Tax is paid, the capital gain will not be subject to income tax again. Loss from the sale of land cannot be reserved nor utilized to offset against the Land Value Increment Tax on other properties. For owner-occupied residential land, this tax is levied at a flat rate of 10% under certain conditions.

Corporate Tax

Income and capital gains earned by companies exceeding TWD 120,000 (US$4,000) are taxed at a flat rate of 20%. Income-generating expenses are deductible when calculating taxable income. This rate applies to companies incorporated in Taiwan or foreign companies doing business in Taiwan.

Property Buying and Selling Taxes/Costs

Property Holding Taxes

Building Tax

Building tax is levied on all buildings in Taiwan at varying rates, from 1.2% to 5%, depending on the building classification. Residential properties are taxed annually at a rate of 1.2% to 2% of their 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 annually for holding land in Taiwan. Tax is assessed by the government taking into account the total value of land owned by a person or an entity in a district. Land for residential use is taxed at a flat rate of 0.2%, if certain prescribed conditions can be met. Land used for other purposes is taxed at progressive rates, ranging from 1% to 5.5%.