Taiwan Clarifies Tax Rules For Foreigners' Expenses

By ExpatBriefing.com Editorial 10 October, 2013

Taiwan's Ministry of Finance has clarified when payments made by employers of foreign professionals can be claimed as deductible expenses on their tax returns.

The Ministry stated, where any organization, institution, school or business employs a foreign professional under an employment contract conforming to the conditions laid out in official "The Scope of Application for Tax Preferences Provided to Foreign Professionals" guidance, payments made to the professional by the employer for expenditures in accordance with that contract may be claimed as tax-deductible expenses.

In such case, it was added, the employer is required to account, obtain and keep all of the related proof of expenditure, including receipts, for compilation of its tax return. The payments based on the employment contract, such as round trip air fares, home leave vacation pay, moving expenses, utility bills, cleaning bills, telephone bills, housing rentals, repair costs for place of residence and educational scholarships for children, may then be excluded from the taxable income of the foreign professional.

In addition, it was explained that a foreign professional's income tax or other taxes paid by an employer in accordance with an employment contract may also be booked as salary expenses by the employer, if the employer withholds this payment as salary of the professional and files the relevant withholding certificate.

The Ministry reminded employers hiring foreign professionals, who are exempt from compiling an annual income tax return, that they are still required to file an "expense details of foreign professionals" return with their local tax bureau.

A comprehensive report in our Intelligence Report series devoted to a study of the ways in which expatriate executives and employees can optimise their remuneration and taxation situations in a number of the main English-speaking countries is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report10.asp

Tags: Individuals | Expatriates | Compliance | Finance | Tax | Business | Tax Compliance | Taiwan | Professionals | Individual Income Tax | Expats | Professionals | Tax |


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