Taxes and Tax Schemes in Taiwan | What You Need to Know in 2025

Taiwan, a thriving island nation known for its technological innovation and robust economy, operates a sophisticated tax system that balances economic growth with social welfare. Situated at the cutting edge of global technology and manufacturing, Taiwan has developed a tax framework that supports its dynamic economic landscape and attracts international talent and businesses.

As a key player in global technology and manufacturing sectors, Taiwan offers a unique tax environment that reflects its position as a global economic hub. The country's tax system is designed to support innovation, attract foreign investment, and maintain economic competitiveness while providing robust social services.

The expat community in Taiwan continues to grow, particularly in technology, semiconductor, electronics, and international business sectors, drawn by the country's economic opportunities and high quality of life.

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Taiwanese Income Tax

Taiwan employs a progressive personal income tax system with multiple tax brackets. The key characteristics of personal income taxation include:

Tax brackets for 2025:

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Social security contributions (as of 2025):

• Employee Labor Insurance: Approximately 6.5% of monthly salary
• National Health Insurance: Around 5.17% of monthly salary (shared between employer and employee)
• Labor Pension: 6% of monthly salary (for local employees)

If you want to have a better understanding of the taxes you should pay on personal income in Taiwan, you can use the personal tax calculator in the Taxation section of the Taiwan page.‍

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Taiwanese Tax on Overseas Income

‍Taiwan's approach to foreign income is based on tax residency:

1. Residents: Taxed on worldwide income
2. Non-residents: Taxed only on Taiwan-sourced income

Residency is determined by:

• Spending more than 183 days in Taiwan within a 12-month period
• Having a permanent domicile in Taiwan
• Maintaining primary economic interests in the country

Special provisions exist for foreign professionals, including potential tax exemptions for certain types of foreign-sourced income.

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‍Taiwanese Tax on Investments

‍Investment income receives specific tax treatment:

• Dividends: Taxed at 20%, with potential reductions for certain circumstances
• Capital Gains:
  • Securities transactions: 0.3% transaction tax
  • Real estate gains: Taxed at progressive rates
• Interest Income: Typically taxed at 20%
• Rental Income: Taxed at progressive income tax rates, with deductions for expenses

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Taiwanese Corporate Taxation

‍Corporate taxation is designed to support business growth:

• Corporate Tax Rate: 20%
• Small and Medium Enterprise Rate: Reduced rates for qualifying businesses
• Value Added Tax (VAT): 5%
• Withholding Tax:
  • Dividends: 20%
  • Interest: 20%
  • Royalties: 20%

Special Tax Regimes‍

Taiwan offers several specialized tax arrangements:

1. High-Tech Industry Incentives: Tax credits for technology and innovation
2. Research and Development Support: Tax deductions for R&D investments
3. Startup Ecosystem Incentives: Special tax treatments for new technology companies
4. Green Energy Investments: Tax benefits for sustainable and renewable energy projects

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Regional Comparison

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Tax Planning for Taiwan

‍Effective tax management requires a strategic approach:

1. Residency Status Optimization: Carefully managing tax residency days
2. Investment Strategy: Utilizing tax-efficient investment vehicles
3. Comprehensive Documentation: Maintaining detailed financial records
4. Professional Consultation: Engaging with local tax experts to navigate complex regulations

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