(1) Declaration and Assessment
The tax year is the calendar year. Generally, the taxable income for the tax year is determined based on the income from the previous calendar year. However, the taxable income from trade or business should be determined based on the income at the end of the accounting year in the previous calendar year. Interest and dividends, in addition to being considered business income, are also taxed according to the calendar year.
At the beginning of each year, the local tax authority issues corporate income tax return forms. Companies must complete the forms within 21 days of issuance. If a company needs to submit an audited report, the filing deadline may be extended to July 31, but the company must first provide an estimate of its taxable income. If not provided, the tax authority has the right to determine the company's taxable income.
For companies with an accounting year from October 1 to September 30 of the following year, they must report the estimated taxable income within 3 months after the end of the accounting year, and the tax notice will be issued based on that estimate.
Individuals must file their tax returns in April. Independent owners and partners must report financial statements audited by accountants.
(2) Tax Payment
Taxes must be paid within 30 days of the issuance of the tax notice. Companies are allowed to pay taxes in installments, with a maximum of 10 months, and the first installment must be paid within one month after the end of the accounting period. If the tax paid exceeds the amount due for each installment, the tax authority will refund it within one month. Once the tax authority discovers that a taxpayer has intentionally underestimated taxable income, it may revoke the taxpayer's right to determine the installment payment amount.
Individuals may pay the tax due in one lump sum within one month after the issuance of the tax notice, or they may follow the regulations below for installment payments:
1. Independent operators: For each tax year from January to October, payments may be made in up to 10 installments. If payments begin in February, the number of installments is reduced to 8, and so on.
2. Salary withheld by employers: For each tax year from January to October, payments may be made in up to 10 installments. If payments begin in February, the number of installments is reduced to 8, and so on.
3. Direct transfer system through postal savings banks or banks: For each tax year from January to December, payments may be made in up to 12 installments. If payments begin in February, the number of installments is reduced to 11, and so on.
(3) Penalties
If a taxpayer is late in paying taxes, a late fee of 5% interest will be charged. If the taxpayer still has not paid within 60 days of the penalty being imposed, an additional 1% penalty will be charged for each subsequent month, up to a maximum of 12%.
A fine of up to $1,000 may be imposed for failing to file the tax return on time.
(4) Time Limits
If a taxpayer has overpaid taxes due to errors in the tax return, they may apply for a refund within 6 years after the tax payment. If the overpayment was caused by the tax authority, the correction period is 12 years.
