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Tax Reform of 2019 Individual Income Tax

  National Taxation Bureau of the Southern Area, Ministry of Finance, expressed that there are two changes in Individual Income Tax beginning in 2019. One is a change in the ways of calculating income from salaries/wages: either a fixed, designated amount of deduction or an actual expense incurred is admissible to be deducted from salaries/wages, which means salaries/wages receivers are permitted to declare allowable expenses if the payment exceeds statutory deduction amount. The other is the addition of a special deduction for long-term care. The tax reform could levy equitable tax on salaries/wages receivers and relieve the burden of low and medium-income families caring for family members with physical or mental incapacity. The amendments are as follows:

  For salaries/wages receivers, as before, the amount of income from salaries/wages shall be all salaries/wages earned for performing duties or doing works after deducting the special deduction. However, starting from 2019, if the total amount of the following necessary expenses which are directly related to services rendered and paid by the income receiver exceeds the deduction amount (NT$200,000 for 2019), the income receiver should submit relevant supporting documents so that these necessary expenses can be deducted from salaries/wages, and the amount of income shall be the balance after such a deduction:
  1. Vocational clothing expenses: The expenses of purchase, rental, cleaning, and maintenance of special clothing which must be worn for performing an occupation or performance costumes.
  2. Upgrading training expenses: The training expenses of participating in courses at specified institutions for the specific skills or expertise which is required to perform duties, do work or follow legal requirements. 
  3. Vocational tool expenses: The expenses incurred in purchasing books, periodicals, and tools for performing duties or doing work. If the efficiency of vocational tools is not exhausted within two years and the expenditure exceeds a certain amount, such tools shall be depreciated or amortized. 
The annual deduction of vocational clothing expenses and vocational tool expenses for each person is limited to 3% of the total salaries/wages in performance of his (her) vocation, respectively, while the annual deduction of upgrading training expenses for each person is limited to 3% of the total salaries/wages.

  For taxpayers, his (her) spouse, or dependent(s) with physical or mental incapacity who need long-term care services stated in Decree No. 1081962863 by the Ministry of Health and Welfare on October 23, 2019, a deduction of NT$120,000 per year may be made for each person. However, the deduction shall not apply to the taxpayer whose circumstances fall under any of following three conditions:
  1. After deducting the amount of the special deductions for pre-school children and long-term care, the applicable tax rate is 20% or more.
  2. The taxpayer opts for the single tax rate of 28% on the total amount of his (her) household dividends and earnings computed separately from their consolidated income.
  3. The amount of basic income of the taxpayer calculated in accordance with the Income Basic Tax Act is greater than the amount of deduction (NT$6,700,000 for 2019).

  The Bureau would like to remind the public that if the taxpayer, his (her) spouse or dependents are qualified for above circumstances, the taxpayer is allowed to declare certain expenses of wages/salaries and special deduction for long-term care while filing individual income tax in May, 2020 (taxable year 2019).

  For any inquiries, please don't hesitate to contact us through our toll-free number: 0800-000-321. We are at your service.

Press release contact: The Individual Income Tax Section, Ms. Cheng
Telephone number: 06-2223111 ext. 8040

Last updated:2019-12-20