Penalty for failure to withhold tax

Taipei National Tax Administration under the Ministry of Finance announced that withholding agents should submit a list of employee income for the whole year to the tax office by the end of January of the following year, and the employees that received the income should file and pay individual income tax according to the regulations.  If withholding agents fail to withhold employee income, the withholding agents will be penalized.

When any organization, institution, school, enterprise, bankruptcy estate, or practitioner of profession pay salary, interest, rental, commission, royalty, cash award or prize given in a contest or game competition, prizes of a chance winning, retirement pay, severance pay, separation pay, resignation pay, life-time pension, old-age pension not covered by insurance benefits, reward for information or accusation, and fees for professional practices, withholding agents involved shall withhold and pay tax at the time of payment.  Withholding agents failing to withhold income tax according to the regulations will be ordered to withhold and pay the unpaid or underpaid taxes, and also pay a penalty of 100% - 300% of the unpaid or underpaid amounts.

If withholding agents have filed non-withholding tax statements and send them to the income receivers, and the income receivers have filed and pay the tax according to the regulations, then the withholding agents will not be ordered to pay the taxes, but will still be ordered to pay a penalty of 100% the unpaid amount for failing to withhold tax.  If withholding agents haven’t withheld tax according to the regulations, but file non-withholding tax statements within the filing period and pay the tax and the interests before the tax office finds out, then the withholding agents will not be penalized.