Who is holding my money and where did they put it?

ROC taxes, overseas payment of taxes, withholding rates, general tax liability issues, and other tax-related matters
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Who is holding my money and where did they put it?

Postby LawFerret » 08 Dec 2006, 22:20

I was not here for 183 days in 2006, but will be here for 183 days in 2007.

1) Starting in 2007, will any or my 20% withholdings be paid to the government, or will my boss keep it all in her pocket?

2) When will she refund it to me? She will owe me a fat chunk of change on the 183rd day of 2007, regardless if she gives me 14% or 20% back. Do bosses actually hand over the cash on the 183rd day, or do they try to hold on to it for other reasons (maybe as collateral to ensure teachers finish their 1 year contract)?

3) Am I supposed to treat this involuntary 20% withholding as an interest free loan from me to my boss, or am I entitled to a reasonable rate of return on my money?

Believe me, I wish I could ask my boss these questions in person. But her advice was for me to go to the tax bureau myself, get some clarification, and then teach her. I didn't know that Taiwan expected it's employees to personally research the tax laws in order to educate management. But I guess I learn something new about the island every day.
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Postby sandman » 08 Dec 2006, 22:40

Your boss doesn't give you any money because she's supposed to have paid it to the tax bureau. She gives you a receipt proving that she's paid tax for you (witholding statement) which you supply to the tax office at tax filing time. If you're entitled to a refund you'll get it from the tax office in the form of a cheque several months later.
If she fails to give you a tax witholding statement then you and she are fucked.
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Postby LawFerret » 09 Dec 2006, 00:17

She gives me a piece of scrath paper indicating the amount of tax that she has withheld. Is this the withholding statement? I certainly wouldn't call this a "receipt", as anyone could hand me a piece of scratch paper with some numbers on it.
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Postby jlick » 09 Dec 2006, 12:09

Within 10 days of any payment requiring withholding, the payer must pay tax withholding through their bank to the government. The payer then takes the payment receipt to the district tax office along with a withholding statement and tax filing form. The tax office will then stamp and return two copies of the withholding statement. One copy is for the payer and another is for the payee. While you should be getting these after each payment you receive, in practice many employers wait until after the end of the year to pass before handing them over (and often they just do one withholding for the whole year). The withholding statement is used as proof of tax payment when filing your tax return. If you paid more in withholding than you owe then you will get a refund a few months after filing your return.

And unfortunately some employers just don't bother making the withholding payment at all and just pocket the payment. Local employees usually don't care about this because then they "don't need to" report that income. However, foreigners who do not pay taxes on income can have problems later. You should remind your employer of this fact and that you have no problem reporting the problem to the tax office.

(I will try to post a scan of the withholding statement later.)
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Re: Who is holding my money and where did they put it?

Postby Rascal » 09 Dec 2006, 17:22

LawFerret wrote:I was not here for 183 days in 2006, but will be here for 183 days in 2007.

1) Starting in 2007, will any or my 20% withholdings be paid to the government, or will my boss keep it all in her pocket?

Normally the government.

2) When will she refund it to me? She will owe me a fat chunk of change on the 183rd day of 2007, regardless if she gives me 14% or 20% back. Do bosses actually hand over the cash on the 183rd day, or do they try to hold on to it for other reasons (maybe as collateral to ensure teachers finish their 1 year contract)?

The refund comes from the government and it often takes several months. I haven't received my return for 2005 yet though I know I will get one.

3) Am I supposed to treat this involuntary 20% withholding as an interest free loan from me to my boss, or am I entitled to a reasonable rate of return on my money?

The money goes to the government, and it's "interest free".

Believe me, I wish I could ask my boss these questions in person. But her advice was for me to go to the tax bureau myself, get some clarification, and then teach her. I didn't know that Taiwan expected it's employees to personally research the tax laws in order to educate management. But I guess I learn something new about the island every day.

She gives me a piece of scrath paper indicating the amount of tax that she has withheld. Is this the withholding statement? I certainly wouldn't call this a "receipt", as anyone could hand me a piece of scratch paper with some numbers on it.

Sounds fishy. Don't they have an accountant?
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