Taiwan Individual Income Tax Q&A 07 -Company Formation_Trademark Registration_Tax Service - Hong Kong CPA

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Taxation - Taiwan

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Taiwan Individual Income Tax Q&A 07

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If the income from rental is applicable to “Rental Housing Market Development and Regulation Act”, how would the income tax be levied?

According to “Rental Housing Market Development and Regulation Act” Article 17, individuals owners of residential units who commission their residential units to the rental housing service business or lease their housing to the rental housing subleasing business, where the contract covenants residential uses for more than one year, may receive income tax benefits for the rents pursuant to the following conditions:

The amount of rental income which does not exceed NTD $6,000 per residential unit each month is exempt from income tax.

In case the amount of rental income exceeds NTD $6,000 per residential unit each month, the exceed amount after deducting necessary depreciation and expenses would be counted as rental income. The necessary depreciation and expenses could be reported item by item. If the said expenses are not reported item by item, then 53% of the rental income per residential unit per month between NTD $6,000 and NTD $20,000 is subject to income tax. If the rental income per residential unit per month exceeds NTD $20,000, 43% of the rental income per residential unit per month is subject to income tax.

What does “Income from Self-undertaking in Farming, Fishing, Animal Husbandry, Forestry and Mining” refer to in Taiwan?

“Income from Self-undertaking in Farming, Fishing, Animal Husbandry, Forestry and Mining” refers to the income gained by manual labour engaging in farming, fishing, animal husbandry, forestry and mining, after deduction of cost and necessary expenses.

What does “Taiwan Income from Property Transactions” refer to?

“Income from Property Transactions” refers to any income derived from transactions of property and right. The method of calculations are as follows:

1.	Where the property or right was originally acquired at a price, amount of the income shall be the transaction price after deduction of original cost and all expenses necessary for acquisition, improvement and ownership transfer of that asset. For example, Mr. Cheng sold a golf club membership for NTD $5 Million, with NTD $200,000 commission paid and purchased at NTD $2 Million, then the income from property transaction would be NTD $2.8 Million.
2.	Where the property or right was originally acquired through succession or donation, amount of the income shall be the transaction price after deduction of value prevailing at time of succession or donation and all expenses necessary for acquisition, improvement and ownership transfer of that property or right.
3.	Income earned by an individual from the sales of apparel or furniture for household use shall be exempted.

Is it necessary to declare for “Income from Property Transactions” if an individual sold a car in Taiwan?

If an individual who is not engaging in the motor vehicles retail industry, sells a car for personal use, the transaction income is exempted from the individual income tax. If there is a transaction loss, it cannot be deducted from the gross income.

If the income from land and house selling of an individual does not subject to the House and Land Transaction Tax, would individual income tax be levied?

If the income from land and house selling of an individual does not subject to the House and Land Transaction Tax, the income from land selling shall be exempted from individual income tax. But the income from property selling would be counted as transaction income and shall be levied as individual income tax. The amount would depend on the transaction price of the property, after deduction of original cost and all expenses necessary. If taxpayer could provide the prove of actual transaction price and original actual cost, and verified by National Taxation Bureau, then individual income tax should be calculated according to the rules mentioned above.

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