What's the alternative minimum tax
Taiwan's Income Basic Tax Act (所得基本稅額條例), known as the Alternative Minimum Tax (AMT) or "minimum tax regime" (最低稅負制), was enacted in 2006. Its goal is to ensure high-income earners pay a baseline of tax despite various tax breaks.
Starting in 2010, individual overseas income was brought under this regime. For foreign nationals investing in US stocks, holding foreign rental property, or earning foreign salary, this matters.
What counts as overseas income
- US and international stock dividends and capital gains (when realized)
- Interest earned at foreign banks or via overseas brokerage accounts
- Rental income from foreign property
- Foreign employment salary
- Foreign trust distributions
Not counted:
- Taiwan stocks, bonds, ETFs (domestic)
- Dividends via 複委託 (Taiwan sub-brokerage) — these are still foreign-sourced (originating from US/foreign companies), so they count as overseas
- Unrealized foreign gains (not yet sold)
The three key thresholds
Threshold 1: NT$1,000,000 inclusion
If your household's total overseas income is under NT$1,000,000 in a year, fully exempt. No inclusion in the AMT calculation at all.
Cross this threshold and the entire amount is included (not just the portion above the threshold).
Threshold 2: NT$7,500,000 exemption
Starting 2024, the AMT exemption is NT$7,500,000 per household (up from NT$6,700,000 before). Subtract this from your basic income amount before taxing.
Threshold 3: 20% tax rate
Anything above the exemption is taxed at 20%.
Calculation flow
- Check if overseas income ≥ NT$1M → if not, skip
- Basic income = overseas income + other AMT items (see below)
- Taxable basic = basic income − NT$7.5M
- Basic tax = taxable basic × 20%
- Final tax = max(basic tax, regular income tax)
- If basic tax > regular: pay the difference
Other AMT items to include
Besides overseas income:
- Certain life insurance payouts to beneficiaries
- Gains on non-publicly-listed stocks
- Specific tax incentive items
Most salaried households only have overseas income in this mix.
Four scenarios with real numbers
Scenario A: Overseas income NT$800K
Below NT$1M threshold → not included. Pay regular income tax only. AMT doesn't affect you.
Scenario B: Overseas income NT$3M, regular tax NT$500K
- Basic income = 3M
- 3M − 7.5M = negative (below exemption)
- Basic tax = 0
- Final = regular NT$500K
- AMT doesn't add extra tax
Scenario C: Overseas income NT$10M, regular tax NT$500K
- Basic income = 10M
- 10M − 7.5M = 2.5M
- Basic tax = 2.5M × 20% = NT$500K
- Basic = regular tax → no additional owed
Scenario D: Overseas income NT$20M, regular tax NT$500K
- Basic income = 20M
- 20M − 7.5M = 12.5M
- Basic tax = 12.5M × 20% = NT$2.5M
- Basic (2.5M) > regular (500K) → pay extra NT$2M
- Total tax: NT$2.5M
Rough threshold to actually owe AMT
Assuming regular tax is near zero (e.g., retired FIRE person living off US stock dividends), AMT kicks in when:
Overseas income > NT$7.5M + extra buffer for regular tax.
For most salaried workers investing in US ETFs (say NT$500K–3M overseas income per year), AMT doesn't bite. It's a concern for:
- Very high net worth households (NT$50M+ in US stocks)
- Retirees living entirely on foreign dividends
- Foreign nationals with substantial home-country investments
Common misconceptions
"Buying US stocks means 20% tax"
No. Only if your household's total overseas income exceeds NT$1M AND the AMT basic amount exceeds NT$7.5M.
"US dividends were withheld 30%, so Taiwan taxes again 20% = 50%"
No. The 30% US withholding is US tax (non-recoverable since Taiwan-US has no tax treaty). Taiwan's AMT is 20% on gross, independent. Not 50%; they're separate regimes.
In practice you might pay both, but on different calculation bases.
"Sub-brokerage (複委託) income is domestic"
No. The channel is domestic but the income source (US companies) is foreign → still overseas income.
"I don't report overseas income"
CRS exchange of information means Taiwan's tax authority probably knows. Not declaring is worse than declaring and paying minimal tax.
For foreign nationals specifically
If you're a tax resident of Taiwan (183+ days in a year), you're subject to AMT on your worldwide income. This includes:
- Stocks / ETFs in your home country
- Home country pension / retirement distributions
- Rental property abroad
- Foreign earned income (with tax treaty considerations)
Double-check: some countries have specific tax treaties with Taiwan (UK, Japan, Singapore, etc.) that may exempt certain categories. Consult a tax advisor familiar with both jurisdictions.
What to do
- Use winpie's AMT Calculator to check if you're affected
- If overseas income approaches NT$1M threshold, decide whether to accelerate or defer realizations
- Keep records: broker 1099s (US), foreign bank statements, dividend receipts
- If AMT clearly applies, engage a CPA familiar with cross-border planning
Official sources
- eTax Portal (財政部稅務入口網) — AMT calculation and filing
- National Taxation Bureau — AMT interpretation rulings
- Taxation Administration — Income Basic Tax Act full text
- Ministry of Finance — exemption amount (adjusted every 3 years)
Disclaimer
This explains the general AMT structure as of 2024. Regulations may change annually. Actual filing should reference the current year's National Taxation Bureau guidance.