When Taiwan companies declare employees’ annual salary income from the previous year, including various income and exemption certificates, if an employee has participated in voluntary pension contributions during that year, the amount of the contribution should be deducted in full of the total salary income to avoid overpaying taxes.
According to Taiwan’s “Enforcement Rules of the Labor Pension Act,” the amount of voluntary pension contributions within 6% of the monthly salary is not included in the taxable income for the year of contribution. Therefore, when Taiwan companies file the “Withholding and Non-withholding Tax”, they should correctly report the amount of voluntary contributions made by the employee in the “Amount of Voluntary Contributions under the Labor Pension Act” field, and the total payment amount must deduct the voluntary contribution amount in full.
For example:
In 2023, the employee's total monthly salary is NT$43,000 (the salary classified for contribution purposes as NT$43,900), with the year-end bonus is 2 months, and the total of annual salary income would be NT$602,000 (NT$43,000 x 14 months). If the employee voluntarily contributes 6% to the pension each month, then the 2023 withholding certificate's “Amount of Voluntary Contributions under the Labor Pension Act" field should be filled with NT$31,608 (NT$43,900 x 6% x 12 months), and the total payment amount should be filled as NT$573,920 (NT$602,000 - NT$31,608).
The benefit of employees voluntarily contributing pensions is that it can be fully deducted from the total annual personal income, not included in the personal income tax calculation. When withdrawing labor pension funds, it will be included in the income declaration, serving as a function to defer tax liabilities. However, it is important to note that the tax-exempt limit for voluntary labor pension contributions is NT$108,000. Moreover, when withdrawing the pension fund, although this retirement income must be included in personal income taxation, the income bracket applicable after retirement is usually lower than that during employment, potentially creating tax savings.
Disclaimer
All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage.
Transferring a house to children through a gift allows the use of the announced current value to calculate the gift amount, and there is a tax exemption available to save on taxes. However, if children sell the house later, they will face a huge unified real estate tax because the profit is calculated based on the announced current value at the time of the gift
Limited company by shares in Taiwan holds an annual regular meeting of shareholders every year. If there are significant matters to be discussed, an extraordinary general meeting of shareholders may also be convened. Generally, both regular meeting and special meeting are convened by the board of directors.
According to the regulations of Company Law in Taiwan, the term of office for director and supervisor of a Taiwanese corporation is maximum of three years, and elections must be held at the end of each term. However, if the directors and supervisors elected in each election are the same as the previous one, they may be re-elected consecutively.
Hong Kong, Macao and Taiwan residents who have lived in the inland (mainland) China for more than six months with a legitimate and stable job, a legitimate and stable residence or continuous school attendance are eligible to apply for a residence permit in accordance with the relevant regulations according to their wishes.