In order to attract foreign professionals, there are currently two tax incentives for foreign professionals, as follows:
In the Act for the Recruitment and Employment of Foreign Professionals, the Ministry of Finance has formulated the Regulations Governing Reduction and Exemption of Income Tax of Foreign Special Professionals and according to the FAQ issued by the Taipei National Taxation Bureau of the Ministry of Finance, those who are eligible for the tax incentives, if they meet the relevant requirements, can also apply the " The Scope of Application for Tax Preferences Provided to Foreign Professionals" issued by the Ministry of Finance on January 8, 1997. Thus, in addition to reducing or exempting personal consolidated income tax for foreign professionals, profit-seeking enterprises can also recognize related expenses.
Regulations Governing Reduction and Exemption of Income Tax of Foreign Special Professionals
This tax incentive is for a foreign special professional who has met the requirements of the Regulation, during the first five years starting from the year when he/she for the first time has resided in the R.O.C. for a full 183 days of the year and has had an annual salary income of over NT$ 3 million, one half of the amount of the salary income exceeding NT$ 3 million for each such year may be excluded from the gross amount of consolidated income of the year for the assessment of individual income tax liability.
Meanwhile, if he/she has obtained the income from sources outside Taiwan set forth in the provisions of Subparagraph 1, Paragraph 1, Article 12 of the Income Basic Tax Act, such income may be excluded from the income basic tax.
The Scope of Application for Tax Preferences Provided to Foreign Professionals
The tax preferences specified in this scope denote that payment made in accordance with the content of an employment contract by any organization, institution, school or enterprise, (hereinafter called “the employer”) which hires foreign professionals may be claimed as expenses, such as the round trip air fare of the foreign professional and his/her family, home leave vacation pay according to the contract, home moving expenses, utility bills, cleaning bills, telephone bills, house rentals, repair costs for place of residence, and educational scholarships for children and such items may be excluded from the taxable income of the foreign professionals. The employer could also recognize as business expenses.
Although the above-mentioned tax incentives can be applied together, their applicable target, criteria and scope are different. The following list is for reference.
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Regulation |
Regulations Governing Reduction and Exemption of Income Tax of Foreign Special Professionals
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The Scope of Application for Tax Preferences Provided to Foreign Professionals
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Applicable Target |
"Foreign special professional” shall refer to a foreign professional who possesses special expertise needed by the R.O.C." in following fields: 1.Science & technology, 2.Economy, 3.Education, 4.Culture & the arts, 5.Sports, 6.Finance, 7.Law, 8.Architectural design, 9.National defense, or 10.The other fields, as announced by the central competent authority, or 11.The field has been recognized by the National Development Council in consultation with the central competent authority as possessing special expertise. |
The present scope of application is limited to the following fields of work for foreign professionals: 1.Architecture and civil engineering. |
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Criteria |
1.A foreign special professional who has been recognized to possess a special expertise has obtained the foreign special professional employment (work) permit document issued by the Ministry of Labor or by the Ministry of Education, and has met all of the following requirements: (1) He/she has for the first time been approved to reside in the R.O.C. for the purpose of work; 2.If a foreign special professional has applied to the National Immigration Agency, the Ministry of the Interior for the Employment Gold Card, met the requirements in the provisions of Subparagraphs 1 and 2 of the preceding paragraph, and did not have household registration in the R.O.C. and was not an individual residing in the R.O.C. in accordance with the Income Tax Act during the five years prior to his/her obtaining the Employment Gold Card, he/she is eligible for applying for the tax incentives during the effective period of the Employment Gold Card and engagement in the professional work. 3.If a foreign special professional has been previously approved to reside in the R.O.C. before his/her employment engaged in the professional work in the R.O.C., and such approval is not given on the ground of his/her engagement in that professional work, he/she shall not be subject to the first-time approval requirement in Subparagraph 1, Paragraph 1 herein. 4.For a foreign special professional who has met the requirements in the preceding Article, during the first five years starting from the year when he/she for the first time has resided in the R.O.C. for a full 183 days of the year and has had an annual salary income of over NT$ 3 million, one half of the amount of the salary income exceeding NT$ 3 million for each such year may be excluded from the gross amount of consolidated income of the year for the assessment of individual income tax liability, and if he/she has obtained the income set forth in the provisions of Subparagraph 1, Paragraph 1, Article 12 of the Income Basic Tax Act, such income may be excluded from the income basic tax. |
1.Employers should apply to the Labor Commission of the Executive Yuan for a work permit letter for foreigners. 2.The foreign professionals are required to stay within the territory of the ROC for 183 days or more in a taxable year and their yearly taxable salaries, whether paid by the employers within the territory of the ROC or not, must be NT1,200,000 or more. If the aforesaid foreign professionals stay less than one year, their yearly taxable salaries calculated in proportion to how long such persons stay in the ROC must be NT1,200,000 or more. However, the yearly taxable salaries of those employed for special needs and approved as a special case by the Ministry of Finance are not limited to be NT1,200,000 or more. |
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Scope |
Excluded from the gross amount of consolidated income of the year for the assessment of individual income tax liability |
1.Excluded from the gross amount of consolidated income of the year for the assessment of individual income tax liability. 2.Employer could recognize as business expense and deducted from corporate taxable income. |
