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From Digital Nomad to Real-Life Worker

ROC taxes, overseas payment of taxes, withholding rates, general tax liability issues, and other tax-related matters
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Re: From Digital Nomad to Real-Life Worker

Postby JustifiedAndAncient » 24 Jun 2016, 12:08

kelake wrote:Charging you income tax when your legal status is tourist. Thats new. I guess I owe the Thai government a small percentage for all those times I brought my laptop when visiting the kingdom.


AFAIK The tax office in Taiwan doesn't concern itself with what your visa status was when you earned the money.

Which is probably for the best, because that freelance work was almost certainly not legit in terms of visas and work permits.
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Re: From Digital Nomad to Real-Life Worker

Postby kelake » 24 Jun 2016, 12:21

JustifiedAndAncient wrote:
kelake wrote:Charging you income tax when your legal status is tourist. Thats new. I guess I owe the Thai government a small percentage for all those times I brought my laptop when visiting the kingdom.


AFAIK The tax office in Taiwan doesn't concern itself with what your visa status was when you earned the money.

Which is probably for the best, because that freelance work was almost certainly not legit in terms of visas and work permits.


Seems like a gray area to me and I've never seen regulations clarifying it. If a tourist come to Taiwan, stays in a hotel and finishes a project based in another country, do they then need to report this to the Taiwan tax authorities?
--
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Re: From Digital Nomad to Real-Life Worker

Postby HenHaoChi » 24 Jun 2016, 12:46

The Taiwan gov probably wisely turn a blind eye to gray area work + and overseas income earned before you apply for a real visa. If they want to encourage more people to go legit and pay tax, they need to let it go. So it looks like they give you a retroactive bill, and ignore the fact that your income may have been earnt in a legal limbo.

Some people may do visa runs for a year or two, fall in love with TW, and switch to a lawful visa. It's best for everyone if they make this process as painless as possible...
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Re: From Digital Nomad to Real-Life Worker

Postby yyy » 25 Jun 2016, 14:47

cfimages wrote:Freelance doesn't really exist in the Taiwan tax code, AFAIK. To be self-employed to the tax office's standards you need to be a registered business here.

Are you sure about that? I didn't notice it in the Income Tax Act, and they told me the 稿費 category was tax free within the $180,000 limit prescribed in the Act, without asking about registration.

Income Tax Act Art. 4: wrote:23. Individual income derived from written articles, copyright books, musical compositions, musical productions, dramas, cartoons, or as remuneration for speeches and lectures on an hourly basis. However, the total amount of such income for the whole year shall not exceed NT$ 180,000;
二十三、個人稿費、版稅、樂譜、作曲、編劇、漫畫及講演之鐘點費之收
入。但全年合計數以不超過十八萬元為限。

Apart from this, there is a "freelance" category, and afaik this category also has no need for registration.
Income Tax Act Art. 14 wrote:Category 2:
Income from professional practice: any income of an individual from professional practice or performances after deduction of the rental for or depreciation of the place of business, depreciation of and repairing expenses for the facilities and equipment required for business, or the cost of medications, supplies, etc. sold to clients, salaries and wages for employees required for business, travelling expenses for practicing the profession and other direct and necessary expenditures, shall be the actual amount of income in this category.
Any individual engaged in professional practice shall at least keep a journal as his accounting book to provide detailed entries of all the operating revenues and expenses. For all business expenditures, documents of positive evidence shall be secured. The documents of evidence and account book shall be kept for a period of at least five years. Measures regarding the setting up, acquisition, and maintenance of the documents of evidence and account books and other related matters shall be prescribed by the Ministry of Finance.
Depreciation of buildings, facilities, and equipment used in professional practice shall be calculated in accordance with the Table of Service Life of Fixed Assets. The relevant provisions with respect to profit-seeking enterprise income tax of this Act shall be applicable, mutatis mutandis. Measures regarding the inspection of the documents of evidence, recognition of the revenues and expenses from professional practice and their account books and other related matters shall be prescribed by the Ministry of Finance.
第二類:執行業務所得:凡執行業務者之業務或演技收入,減除業務所房 租或折舊、業務上使用器材設備之折舊及修理費,或收取代價提 供顧客使用之藥品、材料等之成本、業務上雇用人員之薪資、執 行業務之旅費及其他直接必要費用後之餘額為所得額。
執行業務者至少應設置日記帳一種,詳細記載其業務收支項目; 業務支出,應取得確實憑證。帳簿及憑證最少應保存五年;帳簿 、憑證之設置、取得、保管及其他應遵行事項之辦法,由財政部 定之。
執行業務者為執行業務而使用之房屋及器材、設備之折舊,依固 定資產耐用年數表之規定。執行業務費用之列支,準用本法有關 營利事業所得稅之規定;其帳簿、憑證之查核、收入與費用之認 列及其他應遵行事項之辦法,由財政部定之。

If the work you did was in the capacity of an employee, of course it should be deemed "salary and wages" (which are the same thing in Taiwan). As salary has a lower tax rate than income from professional practice, unless you can get the 稿費 exemption, I think "salary" is in your interest. :2cents:
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Re: From Digital Nomad to Real-Life Worker

Postby yyy » 25 Jun 2016, 14:59

shrimp_crackers3 wrote:
HenHaoChi wrote:I wondered what their tone was like when they were dealing with you, shrimp_crackers. Were they suspicious and probing, or did they just lazily stick you with a bill? Did it look like they saw this situation every day?


They were somewhat familiar with digital nomads/remote workers. They weren't suspicious, and they were actually quite friendly trying to work towards a solution. They didn't offer any deductions, and refused to acknowledge the 1 million overseas income rule, but they did offer a few options such as saying I took care of my parents or showing other dependents.

Money you send to dependents, including elderly parents, is a deduction. If you're a resident, you should get the whole range of deductions (and the personal "exemption") available. If you don't see all of them on the form, you have the concise form and need to ask for the longer one. Your bank account interest should be deducted because it's "investment" income and presumably under the limit, you can deduct residential rent up to $120,000, and so on. You'll need to provide some documents.

If you mean deductions due to business expenses, you'll need to satisfy their rules about that.
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Re: From Digital Nomad to Real-Life Worker

Postby cfimages » 25 Jun 2016, 15:19

yyy wrote:
cfimages wrote:Freelance doesn't really exist in the Taiwan tax code, AFAIK. To be self-employed to the tax office's standards you need to be a registered business here.

Are you sure about that? I didn't notice it in the Income Tax Act, and they told me the 稿費 category was tax free within the $180,000 limit prescribed in the Act, without asking about registration.

Income Tax Act Art. 4: wrote:23. Individual income derived from written articles, copyright books, musical compositions, musical productions, dramas, cartoons, or as remuneration for speeches and lectures on an hourly basis. However, the total amount of such income for the whole year shall not exceed NT$ 180,000;
二十三、個人稿費、版稅、樂譜、作曲、編劇、漫畫及講演之鐘點費之收
入。但全年合計數以不超過十八萬元為限。

Apart from this, there is a "freelance" category, and afaik this category also has no need for registration.
Income Tax Act Art. 14 wrote:Category 2:
Income from professional practice: any income of an individual from professional practice or performances after deduction of the rental for or depreciation of the place of business, depreciation of and repairing expenses for the facilities and equipment required for business, or the cost of medications, supplies, etc. sold to clients, salaries and wages for employees required for business, travelling expenses for practicing the profession and other direct and necessary expenditures, shall be the actual amount of income in this category.
Any individual engaged in professional practice shall at least keep a journal as his accounting book to provide detailed entries of all the operating revenues and expenses. For all business expenditures, documents of positive evidence shall be secured. The documents of evidence and account book shall be kept for a period of at least five years. Measures regarding the setting up, acquisition, and maintenance of the documents of evidence and account books and other related matters shall be prescribed by the Ministry of Finance.
Depreciation of buildings, facilities, and equipment used in professional practice shall be calculated in accordance with the Table of Service Life of Fixed Assets. The relevant provisions with respect to profit-seeking enterprise income tax of this Act shall be applicable, mutatis mutandis. Measures regarding the inspection of the documents of evidence, recognition of the revenues and expenses from professional practice and their account books and other related matters shall be prescribed by the Ministry of Finance.
第二類:執行業務所得:凡執行業務者之業務或演技收入,減除業務所房 租或折舊、業務上使用器材設備之折舊及修理費,或收取代價提 供顧客使用之藥品、材料等之成本、業務上雇用人員之薪資、執 行業務之旅費及其他直接必要費用後之餘額為所得額。
執行業務者至少應設置日記帳一種,詳細記載其業務收支項目; 業務支出,應取得確實憑證。帳簿及憑證最少應保存五年;帳簿 、憑證之設置、取得、保管及其他應遵行事項之辦法,由財政部 定之。
執行業務者為執行業務而使用之房屋及器材、設備之折舊,依固 定資產耐用年數表之規定。執行業務費用之列支,準用本法有關 營利事業所得稅之規定;其帳簿、憑證之查核、收入與費用之認 列及其他應遵行事項之辦法,由財政部定之。

If the work you did was in the capacity of an employee, of course it should be deemed "salary and wages" (which are the same thing in Taiwan). As salary has a lower tax rate than income from professional practice, unless you can get the 稿費 exemption, I think "salary" is in your interest. :2cents:


Not completely sure, no. It's Taiwan - you ask 2 different people who are supposed to know and they'll give you 3 different, and conflicting answers.

As it was explained to me by the tax lady, the $180K thing is mostly for people who have a regular salary / job, and occasionally freelance on the side. Obviously if you earn your entire living from freelancing (as I do), $180K won't get you far. I just take everything to the tax office, hand it all over and they figure it out for me. And come August, a refund goes into my bank account.
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Re: From Digital Nomad to Real-Life Worker

Postby kelake » 25 Jun 2016, 15:51

cfimages wrote:
Not completely sure, no. It's Taiwan - you ask 2 different people who are supposed to know and they'll give you 3 different, and conflicting answers.

As it was explained to me by the tax lady, the $180K thing is mostly for people who have a regular salary / job, and occasionally freelance on the side. Obviously if you earn your entire living from freelancing (as I do), $180K won't get you far. I just take everything to the tax office, hand it all over and they figure it out for me. And come August, a refund goes into my bank account.


It's far easier to file taxes than ever before. This year I didn't need to bring all my docs., they had on their screen a complete record of all my earnings, including a pittance I made in interest on a bank balance I had.
--
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Re: From Digital Nomad to Real-Life Worker

Postby cake » 25 Jun 2016, 23:13

kelake wrote:
cfimages wrote:
Not completely sure, no. It's Taiwan - you ask 2 different people who are supposed to know and they'll give you 3 different, and conflicting answers.

As it was explained to me by the tax lady, the $180K thing is mostly for people who have a regular salary / job, and occasionally freelance on the side. Obviously if you earn your entire living from freelancing (as I do), $180K won't get you far. I just take everything to the tax office, hand it all over and they figure it out for me. And come August, a refund goes into my bank account.


It's far easier to file taxes than ever before. This year I didn't need to bring all my docs., they had on their screen a complete record of all my earnings, including a pittance I made in interest on a bank balance I had.

How did they know about the interest from your bank?
They have access to people's bank accounts?
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Re: From Digital Nomad to Real-Life Worker

Postby yyy » 26 Jun 2016, 09:37

cake wrote:How did they know about the interest from your bank?
They have access to people's bank accounts?

The banks withhold tax (10% for residents, 20% for non-residents, though sometimes they assume the wrong status for you) on interest payments, just like employers are supposed to withhold tax on salary. Both banks and employers are supposed to report the income (interest or salary) and the tax withheld, so the tax people already know when you file.
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Re: From Digital Nomad to Real-Life Worker

Postby cake » 27 Jun 2016, 02:24

shrimp_crackers3 wrote:So for anyone that's in my situation it's a good idea not to listen to the guys in the tax office and make sure you have an accountant help you with this? Why? They denied that the under $1 million rule for foreign income exists, ignored any deductions, and treated it as code 50 which means salary (what about being self-employed), and hit me with a huge tax bill. They said I had an option for a 3 month deferral to which I said "OK" and left. They didn't offer to give me any official notice/letter saying what I owned and when I'd have to pay it. So... lol.

So, they will come back at you next time you are at the tax office? Or will they send a letter out after 3 months?

A friend sent me a message 3 years ago about his experience just inquiring at the tax office.

The woman at the desk told him it would cost around 400,000NT to fix his taxes - for 7 years (the max period the tax office count) undeclared.
She looked at a chart and said if there is no proof of earnings they assume the standard rate of salary for a foreigner his age in Taiwan, which would be 83K/month! Even if he has no job in Taiwan.
She said if he could show them he had earned/received around 33k/month the total bill would be around 50k.
She also said he would not have to pay anything unless he wanted the certificate (to allow him to get an ARC). There would be no installments option too.

Also, a friend in Taichung had some unpaid taxes (he'd had an ARC and a few years with no ARC) and went to the tax office with no proof of earnings (he had applied for a new ARC at the time). He told them he had been a musician trying to make a living. They just gave him the certificate.
I wonder if Taipei is stricter than other tax offices?

yyy wrote:
cake wrote:How did they know about the interest from your bank?
They have access to people's bank accounts?

The banks withhold tax (10% for residents, 20% for non-residents, though sometimes they assume the wrong status for you) on interest payments, just like employers are supposed to withhold tax on salary. Both banks and employers are supposed to report the income (interest or salary) and the tax withheld, so the tax people already know when you file.


Oh yeah, I forgot about that.

The poster who said about being a tourist. If you are here for over 90 days, you are classed as a 'resident'. But of course have no legal rights as a resident and can never apply for residency in that scenario.
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