The gist of the 2018 tax reform passed by Legislative Yuan
Date:2018-01-18
The tax amendment draft was passed on January 18, 2018, including the increase of the standard deductions, the increase of the Special Deductions of Personal Income from Salaries/Wages and for the physically or mentally challenged person as well as for the preschool children. 1. Personal Income Tax: 1.1 The standard deduction of personal income tax is increased to NTD $120,000 from NTD $90,000 (Such deduction is doubling for spouses). Special Deductions for the physically or mentally challenged person and Salaries/Wages are both increased to NTD $208,000 from NTD $128,000. 1.2. Reducing the highest tax bracket of personal income from 45% to 40%. 1.3. As for the dividend income, the taxpayer can either choose (1) the tax rate of 26 % levied on the dividend separately or (2) have the dividend counted as part of total personal income with a tax exemption of dividend at 8.5% which is subject to a maximum of NTD $80,000. 1.4 Eliminating the Imputation Tax credit owing to the Integrated Income Tax System. 1.5 For those who are workplace freshman whose yearly income is less than NTD $408,000 (monthly salary of NTD $30,000), dual-earner families whose annual income is less than NTD $816,000, dual-earner families with 4 members(raising two children under 5 years old) whose annual salary is less than NTD$ 1,232,000, may be exempted from income tax, and therefore reducing the tax burden on them. 2. Profit-seeking enterprise income tax: 2.1 Abolition of business income tax for wholly owned businesses and partnerships, whose earnings will be treated as individual income. 2.2 The corporate income tax rate is increased from 17% to 20%, but if the Taxable Income is equal to or less than NTD $500,000, the tax rate can be adjusted to 18% for 2018 and 19% for 2019, respectively and returned back to 20% in 2020. 2.3 The tax rate on corporate retained earnings is reduced from 10% to 5%. 2.4 Eliminating the Imputation Credit Account (ICA)/imputation system. 3. The dividend tax rate for FINI/FIDI: 3.1 The withholding tax rate is increased to 21% from 20%. 3.2 Eliminating the tax credit owing to the corporate retained earnings. Reference: Taxation Administration, Ministry of Finance, R.O.C
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