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Sep 2008
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In Brief:
The Ministry of Finance ("MOF") has recently released a ruling on 3 September 2008, which outlines the tax treatments of enterprise paying utilities expenses (water, gas, electricity, etc.), and individual income tax payments on the expatriate's behalf. |
The Matter
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The utility expenses, such as water, gas, electricity bills, cleaning expenses, telephone bills or expense for purchasing consuming goods, are considered as enterprise provided benefits to the expatriate, and should be recognized as salary expenses on the enterprise's books and included in the expatriate's salary according to the regulation.
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Enterprise purchased durable furniture for expatriate's usage, if the furniture was recorded on the enterprise's asset list, the enterprise can recognize the depreciation expenses, and not to treat this as the expatriate's salary.
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If enterprise pays Taiwan individual income tax or other tax payments, which are deemed as the expatriate's responsibility, on the expatriate's behalf, these payments cannot be recognized as expenses or costs of the enterprise. On the other hand, these payments are considered as expatriate receiving granted benefits from the enterprise, which belong to Category 10, Paragraph 1, Article 14 of Taiwan Income Tax Law stated Other income, and shall be treated as the expatriate's taxable income.
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The MOF letter Tai-Tsai-Sui-38321of 4 October 1980 and Tai-Tsai-Sui-39359 of 5 November 1981 are to be abolished effective from 1 January 2009.
Exceptions
The MOF has stated that, based on the ruling of tax incentives for foreign professionals, enterprise that makes payment under the provision of expatriate's employment contract, for instance, roundtrip airfares, home leave, children's scholarship, moving expenses, house rental and repair costs, utilities, telephone bills and cleaning expenses will be excluded from the foreign professionals' taxable income and treated as expenses of the enterprise. |
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