[Income Taxes] 183 day Rule

[rocky raccoon]

I switched jobs in August. My new company seems confused about the 183 day rule and has been withholding 20% of my salary.

What can I do to ensure that I won't be taxed the rest of the year at 20%?

[jlick]

I switched jobs in August. My new company seems confused about the 183 day rule and has been withholding 20% of my salary.

What can I do to ensure that I won't be taxed the rest of the year at 20%?

Tell the company accountant that you have already passed 183 days this year. If there is any problem ask them to contact the withholding desk at the local tax office (though the instructions on the withholding form should be clear enough).

[rocky raccoon]

Thanks jlick, I'll have a chat with them tomorrow about this.

[european]

A friend of mine has been living here bar occasional trips abroad for about two years.

You could say he is retired, but he plans to leave sometime next year and start work again.
His income is his savings from abroad.

He has no job in Taiwan, nor hasn't ever worked in Taiwan (or plans to) and enters on 'landing visas'

What is the scenario with regards tax for him?

How would the 'taxman' find him?

Also what if people are entering Taiwan for business purposes and spend more than 183 days in Taiwan?
What happens there?
And their income is from abroad and aren't officially employed in Taiwan.

[jlick]

Someone entering on landing visas and staying more than 183 days would have to pay taxes on their income from work in Taiwan. They might get away with it for a while but if they ever need to apply for a residence permit, work permit or get caught working without a permit, they might be noticed.

[tommy525]

Its kind of a grey area I think. Unlike the USA you are not required as a resident to pay tax on your worldwide income. That means if you can prove you are not earning money because you are in Taiwan, you should be fine (I would think).

Say you are retired in Taiwan and your income is from your pension from abroad.

But that means that you have to keep squeeky clean. NO extensions permitted on your landing visa, etc.

And they may investigate to make sure you are not deriving income from actually working in Taiwan.

[jlick]

Its kind of a grey area I think. Unlike the USA you are not required as a resident to pay tax on your worldwide income. That means if you can prove you are not earning money because you are in Taiwan, you should be fine (I would think).

The current situation is pretty much that, but it is a bit complicated:

1-90 days: Income related to services provided in Taiwan AND paid in Taiwan are taxable. (If paid outside of Taiwan, not taxable.)
91+ days: All income related to services provided in Taiwan is taxable regardless of where paid.

For tax year 2010 things will change. If your total income is over TWD$6m then you will have to pay a 20% tax on all foreign income over TWD$1m. This is part of the Alternative Minimum Tax that has been phased in over the last few years.

[Modest Mouse]

I thought I had a grasp of this 183 day rule, but I have been getting conflicting info on my specific situation. So your feedback would be gratefully appreciated.

I had been working for a school for a year and then my ARC expired on July 31, 2009 . Then I went on a visa run and came back on August 1, 2009. I found a new employer and started working on September 1. They are withholding 20% since they claim the 183 day rule resets if you leave the country/get a new ARC card. Is this true? Will I get 14% of this money back when I file for taxes?

Thanks for your help.

[CraigTPE]

I had been working for a school for a year and then my ARC expired on July 31, 2009 . Then I went on a visa run and came back on August 1, 2009. I found a new employer and started working on September 1. They are withholding 20% since they claim the 183 day rule resets if you leave the country/get a new ARC card. Is this true? Will I get 14% of this money back when I file for taxes?

My understanding is for tax purposes, it's physical presence in the country, regardless of ARC status. That's not to say that your new employer won't cover their ass and withhold 20%.

How much you get back will depend on the tax rate of your net taxable income. If you're making a pile of money, you are taxed at a higher rate....

[jlick]

They are withholding 20% since they claim the 183 day rule resets if you leave the country/get a new ARC card. Is this true? Will I get 14% of this money back when I file for taxes?

The resident tax rate is based on cumulative time in Taiwan in a calendar year, regardless of visa status, any change of status, or trips outside the country. If they are at all confused, they can read the directions on the withholding form or contact the withholding desk at their local tax office. You will get back any overpaid amount after you file your taxes next May, but it may be a year from now before you see that money again.