TAIPEI (CNA) — The Ministry of Finance has adjusted upward a basic allowance that taxpayers can deduct from their income when filing income taxes, a measure that it said will benefit some 1.77 million households around Taiwan.
The basic allowance per person for the fiscal year 2018 for income taxes to be filed in 2019 has been raised from a provisional NT$166,000 (US$5,388) to NT$171,000, the ministry announced on Dec. 24.
Under the new individual income tax filing system to take effect in May next year for income earned in 2018, taxpayers will have two options when they claim deductions.
One option will be to use the old system and claim a personal exemption (NT$88,000 per taxpayer and dependent), standard deduction (NT$120,000 per taxpayer), and special deduction for salary or wages (up to NT$200,000 per person).
The other option will be to claim the basic allowance of NT$171,000 for each taxpayer and dependent instead of the personal exemption, standard deduction and special salary deduction.
The main beneficiaries of the new system will be households with only one source of income but many dependents, the ministry said. It estimated that 1.77 million households will benefit from the new option and cost the government NT$5.5 billion in tax revenues.
The basic allowance adjustment was adopted based on the Taxpayer Rights Protection Act, which went into effect on Dec. 28, 2016.
The act is designed to put into practice protections of the right of existence, the right of work, the right of property and other related basic rights enshrined in the Constitution, and also to ensure the rights of taxpayers and achieve tax fairness, according to the law’s provisions.
By Chiu Po-sheng and Elizabeth Hsu