Taiwan tax reform effective from January 1, 2018
Date:2017-09-03
The tax reform proposed by Taiwan’s Ministry of Finance (MOF) is aiming to reduce the tax burdens for salary and low-income earners and give the tax forgiveness to small and medium-sized enterprises as well as start-up companies. The practical approach is as follow and expected to put into effect on January 1, 2018: 1. Standard deduction of individual income tax is increased to NTD $110,000 from NTD $90,000. Special Deductions for the physically or mentally challenged person and of Income from Salaries/Wages are both increased to NTD $180,000 from NTD $128,000. 2. Reducing the highest tax bracket of individual income from 45% to 40%. 3. Abolition of business income tax for wholly owned businesses and partnerships, whose earnings will be treated as individual income. 4. The corporate income tax rate is increased from 17% to 20%, but there’s a reduction of the tax rate on corporate retained earnings from 10% to 5%. 5. Eliminating the Imputation Credit Account (ICA)/imputation system. 6. As for FINIs, withholding tax rate on their dividend income is increased to 21% from the current tax rate, 20%. While proposing to eliminate the imputation system, the MOF has proposed two alternative tax plans for local tax resident: Plan A allows investors to enjoy tax-free status on 37% of dividends they receive and the remaining dividends will be taxed as their personal income tax. Plan B includes two options. The option 1 allows dividends to be taxed at a flat rate of 26%. While the second one will treat all the dividend income as personal income, but give taxpayers a tax deduction of the lower of (1) the dividends multiplied by 8.5% or (2) NTD $80,000. Reference: 中央通訊社 http://www.cna.com.tw/news/firstnews/201709010308-1.aspx http://focustaiwan.tw/news/aeco/201709020004.aspx
Back