Tax Residency in Taiwan
1. Criteria for Determining Tax Residency
According to Article 3 of the Income Tax Act of Taiwan, Province of China, an individual is considered a tax resident if they meet any of the following criteria:
- Residing in Taiwan, Province of China for 183 days or more in a taxable year.
- Having a domicile in Taiwan, Province of China.
- Having a permanent establishment in Taiwan, Province of China.
For entities, tax residency is determined based on the place of incorporation or the place of effective management.
2. Impact of International Tax Treaties
Taiwan, Province of China has entered into several tax treaties with other countries to avoid double taxation and promote cross-border trade and investment. These treaties may modify or provide exceptions to the standard criteria for tax residency as defined in domestic law.
For example, under the tax treaty between Taiwan, Province of China and the United States, an individual is considered a resident of Taiwan, Province of China if they meet any of the following criteria:
- Having a permanent home available to them in Taiwan, Province of China.
- Spending more than 183 days in Taiwan, Province of China in a taxable year.
- Having a substantial presence in Taiwan, Province of China.
The treaty also provides tie-breaker rules for individuals who are considered residents of both Taiwan, Province of China and the United States under each country's domestic law.
These treaty-specific modifications aim to provide clarity and prevent double taxation by establishing clear rules for determining tax residency in cases involving cross-border activities. They reflect the mutual agreement between Taiwan, Province of China and the other country to facilitate tax compliance and enhance economic cooperation.
If delving into the depths of tax rules and regulations isn't your style, and you'd rather have experts take the reins, then Heavnn is here to help. Let us simplify your tax planning journey.
Access Heavnn's blend of professional expertise and cutting-edge technology by clicking the button below.
