Tax Incentive for Taiwan’s Employment Gold Card

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Taiwan implemented the “Act for the Recruitment and Employment for Foreign Professionals” to attract and retain foreign professionals in Taiwan and create a more welcoming work and residency environment in 2018. This act introduced the Employment Gold Card, a single document that integrates a work permit, residence visa, Alien Resident Certificate (ARC), and re-entry permit. This card is aimed at professionals with specialized skills in fields such as technology, economics, education, culture and the arts, sports, finance, law, architecture, defense, and digital industries, or those recognized as having special expertise by relevant authorities in consultation with sectoral agencies.
Several benefits of the Employment Gold Card:
  1. An open-ended personal work permit that does not require employment with a specific employer and allows freedom in job searching, changing jobs, and taking on part-time work.
  2. Cardholders’ spouses and minor children can apply for dependent residency in Taiwan, and the duration of stay for direct relatives on visit visas is extended.
  3. Cardholders who meet salary and residency duration requirements are eligible for income tax incentives, and health insurance.
The Employment Gold Card also grants holders tax incentives. From the first year that the cardholder resides in Taiwan for more than 183 days and earns a salary exceeding NTD 3,000,000, for a period of five years, 50% of the portion of salary exceeding NTD3,000,000 in any tax year where the cardholder resides in Taiwan for more than 183 days will be exempt from inclusion in the total taxable income. Additionally, this benefit is not subject to the regulations of the Alternative Minimum Tax (AMT).
In practice, a common issue arises where many foreign nationals initially come to Taiwan under a “general professional work permit” and later obtain an Employment Gold Card under the Act for the Recruitment of Foreign Professionals. Whether this allows for the application of tax incentives often becomes a point of contention. A common scenario in practice is that individuals fail to meet the condition of being “approved for residency in Taiwan for the first time due to employment” or have already been residents of the Republic of China within five years prior to obtaining the Employment Gold Card, thus making them ineligible for the tax incentives.
It is important to remind holders if the Employment Gold Card to be mindful of how these regulations may affect their position when filing their individual comprehensive income tax. This awareness is necessary to avoid the possibility of the tax authorities rejecting the claim for tax incentives during the filing process.
If an applicant claims that they were granted residency in Taiwan within the five years before the issuance of the Employment Gold Card, but the approval was not for professional work purposes (e.g., for family dependency or study), the “first-time approval” restriction does not apply. However, the individual must provide relevant documentation proving they did not have household registration in Taiwan and were not considered a resident under the Income Tax Act’s provisions during that time.

Case 1:

John, a foreign professional, earns a salary income of NTD 8,200,000 and overseas income of NTD 2,000,000 in 2024, during which he qualifies for tax incentives. How should the taxable income subject to the tax reduction be calculated?

Answer:

  1. This amount is exempt from inclusion in the basic income for the calculation of the Alternative Minimum Tax (AMT).
  2. Taxable salary income of NTD 7,900,000: This is calculated as NTD 8,200,000 (salary income) minus the special deduction for salary or necessary expenses (assuming John opts for the salary income special deduction of NTD 300,000).
  3. Tax-exempt portion of salary income: (NTD 7,900,000 – NTD 3,000,000)*50% = NTD 2,450,000

 

Thus, the salary income to be included in the total taxable income for comprehensive income tax purposes is : NTD 7,900,000 – NTD 2,450,000 = NTD 5,450,000.

Case 2:

John obtains an employment permit for foreign special professionals from the Ministry of Labor in 2024 and meets the necessary conditions. He resides in Taiwan for more than 183 days each year from 2024 to 2028 and earns a salary exceeding NTD 3,000,000 from professional work. What is the applicable period for tax incentives?

Answer:

The tax incentive period starts from the 2024 tax year. Therefore, John is eligible for the income tax reduction from 2024 through 2028.

Case 3:

John obtains an employment permit for foreign special professionals from the Ministry of Labor in 2024 and meets the required conditions. From 2025 to 2029, he resides in Taiwan for more than 183 days each year and earns a salary exceeding NTD 3,000,000. What is the starting point and applicable period for the tax incentives?

Answer:

Since in 2024, John either did not earn a salary exceeding NTD 3,000,000 or did not reside in Taiwan for more than 183 days, the first year in which he meets all the conditions for the tax incentives is 2025. Therefore, the tax incentive period begins in 2025. The 5-year period of tax reduction will apply from 2025 to 2029.

Case 4:
(Explanation – First time working in Taiwan in 2024 but not meeting the tax preferential conditions every year)

John obtained a work permit issued by the Ministry of Labor in Taiwan in 2024 as a foreign special professional talent and met the necessary conditions. In 2025, 2027, and 2029, he met the requirements of staying in Taiwan for more than 183 days and earning more than NTD 3,000,000 in salary income from professional work. However, in 2024, 2026, and 2028, his salary income did not exceed NTD 3,000,000, or he did not stay in Taiwan for more than 183 days. What is the starting point and the applicable period for the tax incentives?

Answer:

In 2024, since John’s salary income did not exceed NTD 3,000,000 or he did not stay in Taiwan for more than 183 days, the first year he met all the conditions for tax incentives was 2025. Therefore, the tax incentives begin in 2025, with a duration of five years, ending in 2029. Since he did not meet the salary or residency requirements in 2026 and 2028, the years eligible for income tax exemptions are 2025,2027, and 2029.

Case 5:
(Explanation – First time working in Taiwan in 2024, but previously resided in Taiwan in earlier years)

John came to Taiwan in 2018 for educational purposes and returned to his home country in 2019. In 2024, he obtained a work permit issued by the Ministry of Labor as a foreign special professional talent and met the necessary conditions. From 2024 to 2028, he stayed in Taiwan for more than 183 days each year and earned more than NTD 3,000,000 in salary income from professional work. What is the applicable period for tax incentives.

Answer:

John’s stay in Taiwan in 2018 was not for professional work, and prior to coming to Taiwan in 2024, he had not been a resident or stayed for more than 183 days within the preceding five years. Therefore, 2024 marks the first year he meets the conditions for tax incentives (staying for more than 183 days and earning more than NTD 3,000,000 in salary income from professional work). As a result, the tax incentives begin in 2024, and the period during which he can enjoy income tax reductions or exemptions spans from 2024 to 2028.

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