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Taiwan: New Tax Withholding Rates for Non-Residents

(Dec. 31, 2009) Taiwan's Ministry of Finance announced on October 28, 2009, new, generally lower, withholding tax rates, to take effect on January 1, 2010, under the revised Standards of Withholding Tax Rates for Various Types of Income (first issued on December 31, 1973, and revised more than 20 times). For non-resident individuals, a 20% withholding rate will apply to dividends; an 18% rate to salaries and wages and to retirement payments; and a 15% or 20% rate to interest income (applicable, respectively, to certain types of notes and commodities of non-resident individuals or businesses that lack a permanent establishment in Taiwan and to net dividends or earnings of non-resident individuals or businesses that have overseas headquarters). (Lee Joo Fong, New Withholding Tax Rates for Non-Resident Individuals on Various Income from 2010, IBFD Tax News Service, Dec. 15, 2009, via email from [email protected]; Revised Articles of “The Standards of Withholding Rates for Various Incomes” Issued [in Chinese], Taiwan Ministry of Finance Taxation Agency website, Oct. 28, 2009, available at

Under the revised Standards, withholding tax rates on income of residents will remain largely the same – 0% for dividends and 6% for salaries and wages and for retirement income – but the rate for interest income will change to a single rate of 10% from the prior rates of 6% or 20% depending on the financial instrument. (Id.)

According to an explanatory document on the Standards, for non-resident individuals whose monthly total salary is below 1.5 times the basic wage (which currently would come to NT25,920 (about US$801)), there will be a 6% withholding rate (as applies to residents). For non-residents' salaries that exceed this amount, however, the total withholding will be 20%. If a person is simultaneously employed by numerous employers and the entire month's total salary exceeds the above-mentioned threshold sum, resulting in a withholding shortfall, the tax collection agency will seek a supplementary tax payment from the taxpayer for the discrepancy between 20% and the original 6% withholding rate. (There Are Once Again New Provisions on Income Tax Withholding on Non-Resident Salaries [in Chinese], Taiwan Ministry of Finance website, Dec. 22, 2009, available at