The Cabinet has reached a consensus with lawmakers screening amendments to the Income Tax Act (所得稅法). Four increased individual income tax deductions allowed by the amendments would be applicable next May when taxpayers file their returns for this year, Minister of Finance Lee Sush-der (李述德) said yesterday.
Lee was speaking to reporters after giving a report before the legislature’s Finance Committee on the proposed amendments to Clause One of Article Five, Article 17 and Article 126.
Lee said the Ministry of Finance planned to increase the standard tax deduction for individual income from the current NT$46,000 (US$1,379) to NT$73,000 for an unmarried taxpayer and from NT$92,000 to NT$146,000 for a married couple.
A salary or wage earner’s special deduction will be increased from NT$78,000 per salary or wage earner to NT$100,000, while the deduction for the disabled will also be raised from the current NT$77,000 per disabled person to NT$100,000.
The proposed amendments will also grant a deduction of NT$25,000 per student in each household for higher education expenses, instead of the current NT$25,000 for each tax return.
The Ministry of Finance has estimated that the four increased deductions would affect 3.6 million families in Taiwan, accounting for 69 percent of the 5.18 million households that file taxes each year.
According to law, the amendments adopted this year should be implemented only in 2010, making them good for next year’s income tax returns. But legislators of the ruling Chinese Nationalist Party (KMT) said this would not be a problem, because they would introduce another amendment to allow the newly increased deductions to be applied to this year’s taxes.
Individual income tax is levied on Taiwan-source income of both resident and non-resident individuals per calendar year.
Individuals are considered residents in Taiwan for tax purposes if they are Republic of China citizens or if they are foreign nationals who reside in Taiwan for at least 183 days within a calendar year.
They are subject to income tax on all their incomes that originate in Taiwan and must file income tax returns and pay taxes between May 1 and May 31 of the following year.
The incomes of the taxpayer, taxpayer’s spouse, and dependents must be consolidated and reported on one income tax return.