Taiwan Enacts Tax Incentives Benefiting Foreign Professionals

Taiwan companies that pay certain types of allowances and expenses on behalf of foreign professional employees will be able to claim such payments as company expenses for tax purposes following enactment of new regulations taking effect on January 1, 2009.  

Issued to help Taiwan companies attract foreign professionals to work in Taiwan, enactment of the “Scope of Application For Tax Preferences Provided to Foreign Professionals” means that when employers pay expenses such as travel and relocation costs, rental fees, utility and telephone bills as part of compensation packages for their foreign professional employees, foreign professionals no longer need to include such payments on their personal income tax returns and pay income taxes on them. 

Under the new regulations, the following types of allowances and expenses paid on behalf of foreign professional employees may be claimed as company expenses by employers:

1. Travel allowances for the foreign professional employee and accompanying family members
2. Travel allowances for vacations after serving for a certain period
3. Relocation fees
4. Utility bills
5. Cleaning fees
6. Telephone bills
7. Rental fees
8. Maintenance fees
9. Education allowances for children of foreign professional employees

To qualify under the new regulations, the foreign professional employee must meet the following requirements:

1. The individual must be a foreign national. Dual nationals simultaneously holding citizenship of a foreign country and Taiwan do not qualify as foreign nationals.
2. The individual must reside in Taiwan for at least 183 days per tax year.
3. The individual must either be employed in specialized or technical professional position as defined in Article 46 of the Employment Services Act, or in a managerial-level position with a foreign enterprise or investment project approved by the government.
4. In most situations, the individual’s monthly salary should be over NT$100,000.