Taxes revolve around just a few issues for people teaching English in Taiwan. Let's take a look at them. Before we begin, we need to know that a tax year in Taiwan runs from January 1st to December 31st. Taxes for the current year are always filed in May of the next year. The tax rates depend on your income for the year: earn up to 370,000, your tax rate is 6%, 370,000 to 990,000 it's 13%, 990,001 to 1,980,000 it's 21%; 1,980,001 to 3,720,000 it's 30%; 3,720,001 +...40%
The most common for teachers is 13%. If you're single and unmarried the first 74,000 you earn is untaxed.
The basic issue: Foreigners living in Taiwan have their wages taxed at 20% until they have stayed more than 183 days during a tax year. After 183 days, they stop taking 20% and you go back to your regular rate.
For most teachers that'll be 13%. But, for 183 days, you paid 20%, 7% more than you should have. Since you overpaid, you get back the difference when you file your taxes.
That part is easy to understand. During your first 183 days you pay more than you should, so you get it back. Ok...now, let's get to some questions.
183 Days
Q: I have just gotten a job and an ARC, but I've been here four months already! Do those first months count toward my 183 days?
A: Yes. The 183 day total is calculated by the time you've been here, not by what you were doing. It goes by the dates in your passport, exclusive of the first day. If you came on January 1st, but didn't get an ARC until May 2nd, you would have to pay 20% tax for just two months. The 183 days are figured by your arrival date: you arrived 4 months ago, so, even though you are just getting your ARC and beginning to work, those first 4 months are included toward your 183 days.
Q: I finally made 183 days, but my school only lowered my tax rate to 10%! What's up?!
A: The accountants tell the schools that, because your hours can vary, it's impossible to predict exactly how much you will earn in a year. Maybe it will be less than 370,000 (no way)? Maybe 888,000? Maybe more than 990,000? After 183 days, should your school start taking 6%, 13%...21%? The accountants tell them to hedge, hit it in the middle: 10%. You settle the difference when you file in May of next year.
July 2nd, every year
If you arrive on or after July 2nd, there are less than 183 days left in the year. When you get your job and your ARC, your employer will take 20% until the end of the year. No refunds. If you earn 370,000, if you only earn 600,000 -- no matter what, since for that year you'll be here less than 183 days you have pay 20%, and you can't get a refund.
Q: Burned!! That blows! I was here 182 days, paid 20% and got no refund...great! So, does that mean I'll start over at zero days on January 1st??!!
A: Unfortunately, yes. You do start over. For the first 183 days of the new year your employer will again deduct 20%. But, stay 183 days in that next year and you can get that difference back. And once you pass day 183, you will drop to the regular rate.
Q: I WAS here 183 days last year, do I start over at zero also?
A: No, if you stayed in Taiwan 183 days in the previous year, and stay into the next year, you do NOT go back to 20%. You will remain at the regular rate for your icome level. After your first 183 days in a year period, as long as you stay in the country for 183 days each succesive year, your tax rate will not go back to 20%.
Q: I am waiting to get to 183 days, but I have to leave the country, will that reset the count to zero?!
A: No. The counting is cumulative. If you stayed for 3 months, left for a month and came back, your first three months will still count toward your 183 days for that year.
Refund Checks
The tax year runs from January to December. Your taxes for this year are filed during May of the next year. Refunds become available by late November.
Q: I got here in January, I'm leaving in December... how can I get my money if taxes are filed in May of NEXT year?
A: You need to find a friend who is a Taiwanese citizen. Ask your job's accounting office to prepare your Earnings Statement for you (see below). Go to your local tax office. Bring your passport, your ARC and the earnings statement from your job. When you go to the office they will ask you to fill out a form and you can calculate your refund on the spot based upon the Earnings Statement you've given them. Then, they will process it and send you a check. If you're in Taipei, the check will be available within one week. If you're outside of Taipei, it takes longer. They will send the check to your friend. Additionally, you friend's name will be attached to filing. Should you owe any other taxes, your friend would be responsible.
