Three Requirements Must Be Met for Tax Incentives for Foreign Special Professionals
According to the National Taxation Bureau of Kaohsiung, Ministry of Finance, in order to recruit and attract foreign professionals needed by our industries and to enhance our national competitiveness, the government promulgated the "Act for the Recruitment and Employment of Foreign Professionals" to provide a tax incentive measure, which has been effective since February 8, 2018. Eligible foreigners who meet certain requirements can apply for tax incentives within 5 years from the first applicable year when filing their individual income tax return or when filing the tax return upon departing the territory of the R.O.C.
The Bureau states that the foreigners who have obtained the "foreign special professional employment (work) permit" issued by the Ministry of Labor or the Ministry of Education, or who hold an "Employment Gold Card" issued by the National Immigration Agency, Ministry of the Interior, or who hold a relevant certificate of having special expertise issued by the central competent authority and meet the following three requirements, then the foreigners will be eligible to apply for the tax incentives.
1. He/she is approved for the first time to reside in the R.O.C. for the purpose of work;
2. He/she is engaged in professional work related to the recognized special expertise in the R.O.C.; and
3. During the five years prior to his/her employment engaged in professional work, he/she 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.
The Bureau further clarified that the tax incentives are provided as such, within 5 years starting from the tax year in which the foreign special professional for the first time meets the conditions of residing in the R.O.C. for 183 days or more, and having a salary income of more than NT$3,000,000, half of the amount above the NT$3,000,000 in each such tax year is excluded from the gross income. In addition, in each tax year, if there is overseas income set forth in the provisions of Subparagraph 1, Paragraph 1, Article 12 of the Income Basic Tax Act, it is also excluded from the basic income.
For example, Kevin, a French engineer, obtained a foreign special professional employment (work) permit issued by the Ministry of Labor in 2022 and met the three aforementioned requirements. He resided in the R.O.C. more than 183 days in 2022, and had a salary of NT$8,000,000 (after deducting the special deduction of income from salaries or necessary expenses) related to his special professional work and overseas income of NT$7,000,000 in 2022. The tax incentives period is from 2022 to 2026, and the amount of income with tax incentives for the individual income tax return for 2022 is calculated as follows :
1. Amount of non-taxable salary income = (NT$8,000,000 – NT$3,000,000) * 50% =NT$2,500,000
Amount of taxable salary income=NT$8,000,000 – NT$2,500,000 = NT$5,500,000
2. Overseas income NT$7,000,000 is excluded from the basic income
Finally, the Bureau reminds taxpayers that the tax filing season is approaching in May, and those foreign professionals who are eligible for the tax incentives in 2022 should file an individual income tax return this year, fill out the Application for Exemption from Income Tax for Foreign Special Professionals, and attach the relevant documents to apply to the tax authority. If a foreign special professional leaves the country in the interim of the year, he or she should file a tax return for the income of that year before leaving the R.O.C. Please be sure to fill out the relevant application forms truthfully to avoid penalties.
If there is any question about the "Tax Incentives for Foreign Special Professionals," feel free to dial the toll-free service number 0800-000-321, or go to the Bureau's website (https://www.ntbk.gov.tw) to make an online inquiry through the "National Tax Assistant" of the national tax smart customer service.
Provided by:Second Individual Income Tax Section
Contact person:Ms.Lee
Telephone:(07)7256600 ext.7226
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=6eb4ffe00766450eb3fa4d4b9d764e7f