Summary of Interpretation 745, concerning the calculation of salary income under three provisions of the Income Tax Act ––(1) Article 14, Paragraph 1, Category 3, Subparagraph 1, (2) Article 14, Paragraph 1, Category 3, Subparagraph 2, and (3) Article 17, Paragraph 1, Subparagraph 2, Section 3-2––salary earners are allowed to deduct from their personal incomes only a fixed amount of the Special Deduction Amount for Salary Income. When the necessary expenses exceed the statutory Deduction Amount per year, salary earners are not allowed to deduct necessary expenses either by enumeration or other methods, which is inconsistent with the right to equal treatment under Article 7 of the Constitution. Accordingly, the relevant authorities should review and amend the Income Tax Act in accordance with this Interpretation within two years from the announcement of this Interpretation.
 

In order to make the calculation of salary income conform to judicial interpretation and the principles of fairness and simplicity, the Ministry of Finance has drafted amendments to Articles 14 and 126 of the Income Tax Act. Salary earners are allowed to choose either one of two methods for the calculation of salary income, which were passed by the Legislative Yuan on July 1, 2019.
 

The amendments to the Income Tax Act refer to the method of salary deduction in major countries, taking into account the fairness of the tax and the simplification of the tax administration. The four principles for deduction are based on (1) Directly relevant and necessary provision of services (2) Real burden (3) Significance (4) Commonality, including "occupational clothing expenses," "upgrading training fees," and "occupational tool expenditures." Wage earners can choose the best option regardless of their industry category. The Act was promulgated on July 24, 2019 and has been enforced as of January 1, 2019.