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According to Paragraph 2, Article 7 of the Income Tax Act, an individual residing in the Republic of China (ROC) refers to (1) any person who has a domicile in the ROC and resides in the ROC at all times; or (2) any person who does not have a domicile in the ROC but resides in the ROC for at least 183 days in total in a calendar year. In determining whether an individual meets criterion (1), the tax authorities used to refer only to an individual's household registration whereby an individual will be treated as an ROC resident for tax purposes as long as he/she is registered under an ROC household registration. This gave rise to many disputes in cases where individuals holding an ROC passport but not residing in the ROC are treated as ROC residents simply because they are registered under ROC household registrations.
In response, on 27 September 2012, the Ministry of Finance issued a directive (Ref. No.: Tai-Cai-Shui-Zi-10104610410) which sets forth the Guidelines for the Determination of Individuals Residing in the Republic of China ("Guidelines"). According to the Guidelines, in determining whether an individual should be treated as an ROC resident for tax purposes, the tax authorities must consider the following facts, in addition to his/her household registration:
(a)
Whether the individual has resided in the ROC for at least 31 days in total in a tax year; or
(b)
If the individual has resided in the ROC for one day or more but less than 31 days in a tax year, whether the individual's social and economic activities were primarily conducted in the ROC. In determining whether social and economic activities were primarily conducted in the ROC, the tax authorities must evaluate the totality of factors such as family ties, occupation, place of employment, business and properties, and take into account whether the individual is insured under the ROC national health insurance and/or labor insurance scheme and whether his/her spouse and/or any child under the age of 20 resides in the ROC.
