It has been published on 28 November 2012 that the Ministry of Finance has announced that, because of the inflation linkage within Taiwan’s tax code, individual income tax thresholds and brackets will be increased automatically next year.
As inflation has exceeded 3% since deductions and thresholds were last restructured, the government is expected to make changes that will entail a loss of up to TWD7.5bn in revenue, and help some 3.5m Taiwanese taxpayers with the income tax payable in 2014 on their 2013 earnings.
In particular, the personal tax exemption will rise by TWD3,000, from TWD82,000 to TWD85,000, with the tax exemption for those aged 70 or above rising by TWD4,500, from TWD123,000 to TWD127,500. In addition, the increase in the threshold for a couple will be the greatest, increasing by TWD6,000, from the present TWD152,000 to TWD158,000.
Taiwan’s five tax brackets will also be moved upwards, with more of taxpayers’ income thereby being taxed at lower rates. For example, the lowest 5% tax bracket will apply to taxable incomes up to TWD520,000, a rise from the current TWD500,000.
Similarly, the next 12% bracket will stretch from taxable incomes from TWD520,000 to TWD1.17m (up from TWD1.13m), while the highest 40% bracket would then cover annual incomes above TWD4.4m (up from TWD4.23m).
