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18% Tax for December??

ROC taxes, overseas payment of taxes, withholding rates, general tax liability issues, and other tax-related matters
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18% Tax for December??

Postby c_retals » 08 Jan 2016, 00:56

Hello:

I've been teaching English in Taiwan since July of 2014 (for HESS). I thought I had this tax system figured out: within a given calendar year (Jan 1 - Dec 31) after 183 days your tax rate drops from 18% to 5 or 6%. That's pretty much it right? According to HESS, it's not that simple.

I have been working in Taiwan since July 2014, so for 2015 I satisfied the 183 requisite on July 2nd. My tax rate predictably went down from 18% to 5%. And it was the same for the following months of Aug, Sept, Oct, and November.

However, when I went to pick up my pay for December 2015 yesterday ((January 7) we are paid on the 7th of the following month), I was surprised to see that my income was taxed at 18% and not at 5%. When I raised an issue, they defended the 18% rate by saying that since they are paying me in the new calendar year, the payment is subject to the new calendar year rate of 18%. (A co-worker whose contract ended on Dec.31 was paid for December on Dec.31 was taxed at 5%). Another co-worker's response of "that's just the way they do it in Taiwan" just doesn't satisfy me, especially since I can find nothing about this online.

Even if it is legal, which I find hard to accept, I feel like they should have given me fair warning that I would be getting paid significantly less than I was expecting for December 2015.

Any info or insight on this matter would be much appreciated! Thanks. :notworthy:
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Re: HESS taxing me 18% for December??

Postby the bear » 08 Jan 2016, 07:57

par for the course, December earnings are counted in the next tax year.
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Re: HESS taxing me 18% for December??

Postby spaint » 08 Jan 2016, 13:00

Yeah, they're right unfortunately. Your earnings are taxed based on the period in which they were paid, not the period in which they were earned.
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Re: 18% Tax for December??

Postby Abacus » 08 Jan 2016, 17:01

Unfortunately this is the way it has to be. Stupid 18%.
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Re: 18% Tax for December??

Postby kadim » 12 Jan 2016, 13:57

If you stay more than 183 days in 2016 then this payment for December will be taxed with 5% rate so that you can claim a refund later. If you've been working since 2014 then you should have noticed the same last January.
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Re: 18% Tax for December??

Postby yyy » 13 Jan 2016, 13:37

Abacus wrote:Unfortunately this is the way it has to be. Stupid 18%.

It's not that they need to deduct 18%, just that you can't force them not to deduct it, even if your contract with them goes for more than 183 days in the current year. They can use the resident withholding rate if they want to.
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Re: 18% Tax for December??

Postby SuperS54 » 13 Jan 2016, 13:52

As already pointed out, tax is paid on when the money is received, not when it's earned. Hess are entirely legally protecting themselves in the event that you do not stay in Taiwan for more than 183 days. Think of it as enforced savings, you will get a refund come tax time.
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Re: 18% Tax for December??

Postby Abacus » 13 Jan 2016, 16:44

yyy wrote:
Abacus wrote:Unfortunately this is the way it has to be. Stupid 18%.

It's not that they need to deduct 18%, just that you can't force them not to deduct it, even if your contract with them goes for more than 183 days in the current year. They can use the resident withholding rate if they want to.


Any smart business would tax it at 18%. From a business point of view it basically has to be 18%.
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Re: 18% Tax for December??

Postby tommy525 » 13 Jan 2016, 23:54

In the USA, your income received in 2016 is income for 2016, even if it was a bonus for work in December 2015, but received in 2016, it counts as 2016 income.

What is dumb in Taiwan is this 18pct tax withheld until 183 days in the calendar year has passed. It is understandable only if substantial numbers of people skipped the country before 183 days, that is an IF.

Also , it would be fairer if , once you go past the 183 days on the rock, whatever has been paid in tax withheld should be immediately counted towards dollars withheld.

Currently:

18 pct held until 183 days reached, then 5 to 6pct (in many cases) until the end of the year. What is excess is refunded when you do your taxes for the prior year.

Suggestion:

18 pct held until 183 days reached. Then zero pct deducted until what is excess is absorbed, then resumed at 5 to 6 pct (as the case may be) till the year ends. You will get less of a refund when you do your taxes but you got your money back faster. And in my view, more equitably.
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Re: 18% Tax for December??

Postby SuperS54 » 14 Jan 2016, 00:11

tommy525 wrote:In the USA, your income received in 2016 is income for 2016, even if it was a bonus for work in December 2015, but received in 2016, it counts as 2016 income.

What is dumb in Taiwan is this 18pct tax withheld until 183 days in the calendar year has passed. It is understandable only if substantial numbers of people skipped the country before 183 days, that is an IF.

Also , it would be fairer if , once you go past the 183 days on the rock, whatever has been paid in tax withheld should be immediately counted towards dollars withheld.

Currently:

18 pct held until 183 days reached, then 5 to 6pct (in many cases) until the end of the year. What is excess is refunded when you do your taxes for the prior year.

Suggestion:

18 pct held until 183 days reached. Then zero pct deducted until what is excess is absorbed, then resumed at 5 to 6 pct (as the case may be) till the year ends. You will get less of a refund when you do your taxes but you got your money back faster. And in my view, more equitably.


An employer can do all that it just depends on whether they are willing to go to the bother or not. The company I work for makes the same deductions for everyone, so no 18% for foreigners for the first half of the year.
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