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Postal Life Insurance ServicesAlternative Minimum Tax

Last updated:2023/02/23 Print

Q. What is Alternative Minimum Tax? When to implement?

Alternative Minimum Tax intends to let people with high income, who are entitled to various tax exemptions with complete tax exemptions or lower taxation burden, to make basic contribution to government fiscal policy. Since the majority of people are taxpayers having paid tax without entitling to the tax exemption, and therefore the minimum tax will not be applicable.
To implement Alternative Minimum Tax, Taiwan has specifically formulated the “Income Basic Tax Act” and the act came into force commencing from January 1, 2006. The notice for applicant and policy completion instructions are shown in the illustration.

Q. What is the relationship between the implementation of Alternative Minimum Tax and insurance?

According to Article 4, Item 1, Subparagraph 7 of the Income Tax Law, all types of benefit payments to policyholders, including maturity,survival,death etc., are exempt from income tax for the beneficiaries.
In response to the implementation of Alternative Minimum Tax on January 1, 1995, according to Article 12, Paragraph 1, Subparagraph 2 of the Basic Income Tax Regulations, life insurance and annuity insurance (excluding accident insurance and health insurance), the beneficiaries receive maturity benefit payment, survival benefit payment, and death benefit payment, and the income tax shall be calculated in accordance with the relevant regulations of Alternative Minimum Tax. In addition, the increase in income may be included in the wealth exclusion clause and thus affect the payment of social welfare, such as subsidies for the lowest-income households and old farmer allowances.

Q. How to inquire about the relevant regulation of Alternative Minimum Tax?

Please go to the Ministry of Finance's tax portal sites(https://www.etax.nat.gov.tw/)/tax information/tax knowledge/tax questions and answers/national tax questions and answers/comprehensive income tax/7.basic income tax, consult the relevant issues of the regulations, or contact the tax collection agencies everywhere.