Taiwan is an island which lies off China’s coast, between the East and South China Seas. Beyond China, Taiwan’s closest neighbours are Japan, to the northeast, the Philippines, to the south, and Vietnam, to the west. Currently the largest economy of any non-UN state, Taiwan went through rapid industrialisation and economic growth in the mid-20th century, transitioning from a single-party state to a democracy. IMF statistics rank Taiwan as one of the top-25 largest economies in the world, and the country is one of the ‘Four Asian Tigers’, along with Singapore, Hong Kong and South Korea. Over the past 30 years, Taiwan developed as a capitalist, export economy, achieving an average GDP growth of 8%. Important financial interests in Taiwan include the electronics industry, machinery production, the ICT industry, and the financial services sector, while emerging interests include biotechnology and tourism. With a reputation for industrial deregulation and a straightforward business set-up process, Taiwan is attracting investment interest from across the world. Taiwan ranked 11th on the World Bank’s Ease of Doing Business Survey 2017.
Interested investors should find plenty of promising reasons to target Taiwan:
Taiwan’s Government encourages inward investment to continue to strengthen the economy, with specific incentives aimed at development zones. Taiwan is recognized globally as having a strong entrepreneurial nation and having invested in the development of advanced production processes and manufacturing efficiency. Foreign and local investors are treated equally and are both eligible for investment incentives.
The company is required to have a legal entity established in order to process a payroll. Certain documents and procedures must be adopted and submitted to the government. It normally takes about three to four weeks for the registration process to be completed. Taiwan Company (Subsidiary) Registration Procedures:
It is not mandatory to make payments to employees from an in-country bank account. To make payments to authorities, wiring is not applicable; authorities must be paid either by check or cash personally at a local bank.
The working week in Taiwan is Monday to Friday. The working day for commercial offices is typically from 0900 to 1800.
The island of Taiwan was inhabited by an aboriginal civilisation until the 17th century, when Holland and Spain established colonies there. Taiwan changed hands several times over the following centuries, until the Republic of China claimed sovereignty in the 20th century. Today, Taiwan is a self-governing state, having transitioned from a dictatorship to a democracy in the late 20th century. Historically, Taiwan has always been an important business destination - a gateway to China, and Asia, with maritime links to the rest of the world. Bordering the East and South China seas, the Taiwan Strait, and the Pacific Ocean, Taiwan’s climate ranges from tropical to temperate, and experiences rainy seasons along with periods of humid heat throughout the year. With rugged mountain ranges, and gently rolling plains, Taiwan’s environments are diverse and beautiful, and attract tourism from all over the world.
Formal Name: Republic of China
Population: 23 million (Government, Republic of China, 2011)
Primary Language: Mandarin
Chinese Monetary unit: New Taiwan Dollar (NT$)
Main Exports: Electronics, optical and precision instruments, textiles.
GNI per capital: US $42,390 (World Bank, 2010)
Internet domain: .tw
International Dialing Code: +886
Hello 你好 (nǐhǎo)
Good morning 早上好 (zǎoshànghǎo)
Good evening 晚安 (wǎnān)
Do you speak English? 你会说英语吗? (nǐ huìbúhuì shuō English?)
Good bye 再见 (zàijiàn) Thank you 谢谢(xièxiè)
See you later 回头见(huítóujiàn)
If an entity is newly established, an initial registration for both employer and employee to participate in Social Security Schemes will be required. Subsequent to the initial registration, enrolment or termination of Social Security will be required whenever an employee is newly hired or terminated.
Further information can be found via the following governmental Bureaus:
Bureau No.4, Sec. 1, Roosevelt Rd., Zhongzheng Dist., Taipei City 100, Taiwan (R.O.C.)
Bureau No. 140, Xinyi Road, Sec 3, Da An Dist., Taipei City 106, Taiwan (R.O.C.)
The employer is required to deduct withholding Tax when salary related payments are made to the employee.
A resident’s net taxable income is taxed at graduated rates ranging from 5 percent to 45 percent for 2016. The maximum tax rate is currently 45 percent on net taxable income earned over 10,000,001 Taiwan new dollars (TWD). For non-residents subject to tax in Taiwan, the applicable tax rate for the salary income will be fixed at 18 percent of gross salary income.
Resident withholding (W/H) Tax contributions are to be paid by the 10th of the month following the month that the salary is paid. The W/H tax statement is to be filed by January 31st in the following year for the year covered. Interest surcharge will be imputed for late payment of W/H, tax and penalty will be levied for late filing of a W/H Tax statement. Non-resident, contributions for withholding (W/H) Tax and filing for W/H tax statement are to be paid and filed within 10 days following the month the salary is paid. Interest surcharge will be imputed for late payment of W/H, tax and a penalty will be levied for late filing of a W/H Tax statement.
For regular monthly Taxable income, W/H Tax is deducted based on the statutory W/H Tax table released by the government. The main factors to determine the W/H Tax are the amount of monthly taxable income and number of dependents. For example, with monthly income of NT$190,000 and one dependent, W/H Tax is NT$19,500. For irregular Taxable income, 5% W/H Tax rate is adopted.
Labour Insurance is deducted based on the table released by the government. Effective from January 1, 2015, labour insurance premium rate will be adjusted from 9.5% to 10%. For an employee, the deduction is calculated at insured cap x 10% x 20%. The amount borne by the employer is calculated at (insured cap x 10% x 70%) + (insured cap x 0.135%). For example, with insured cap of NT$43,900, premium borne by employee is NT$878 (NT$43,900 x 10% x 20%), premium borne by Employer is NT$3,143 (NT$43,900 x 10% x 70%) + (NT$43,900 x 0.135%)+(NT$43,900x0.025%).
The employer is required to enrol for labour insurance, health insurance and LPA at the on-board date and also deduct labour insurance and health insurance borne by employees from their salary.
For health insurance, the premium borne by employees is calculated at insured cap x 4.91% x 30%, the premium borne by the employer is calculated at insured cap x 4.91% x 60% x 1.7.
For example, with insured cap of NT$182,000 and no dependent, National Health Insurance (NHI) borne by employee is NT$2,681 (NT$182,000 x 4.91% x 30%), premium borne by employer is NT$9,115 (NT$182000 x 4.91% x 60% x 1.7). For supplementary NHI, the employer will need to pay the supplementary premium when total monthly Taxable income exceeds total monthly insured cap. Further, the employer will be required to deduct 2% supplementary NHI, if the accumulated amount of bonus paid during a Tax Year exceeds four times of NHI insured cap of the employee to whom bonus is paid. LPA contribution is calculated at LPA cap x 6%. For example, with insured cap of NT$150,000, LPA contribution would be NT$9,000 (NT$150,000 x 6%).
Social Security payments are to be paid to authorities by the following dates:
Interest surcharge will be imputed for late payment of Social Security contributions.
Labour Pension Act (LPA)
The premium rate is 4.19% effective from Jan 1, 2013 which is applied to the insured cap for premium calculation. Effective from Jan 1, 2013, supplementary health insurance of 2% is to be paid by employee and employer when the conditions governed by the 2nd generation rules prevail.
W/H Tax Payment Slip
For W/H Tax Payment Slip the following information is required:
Social Security Enrolment and Termination Forms
For social security enrolment and termination forms the following information is required:
A signature is not required on these documents, however, for social security, the company’s stamp and responsible person’s stamp will need to be affixed on the form. In Taiwan this type of stamp is called a ‘chop’. All documents can be submitted either by the payroll provider or by the client.
New employees have to be registered with Social Security authorities. There are no regulations clearly stating the deadline for the employee to be registered with authorities; however, they should be registered at the on-boarding date.
For setting up a new start the following information is required:
Payment for Leavers must be made within 30 days subsequent to the termination of employment. For voluntary termination, the Employer needs to file Termination of Social Security with authorities. For involuntary termination, the employer needs not only to file termination of social security but also report to the government of redundancy with reasons for employee’s termination.
Employers in Taiwan have certain withholding obligations to their employees as part of the payroll process. Primary withholding obligations involve individual income tax and social security contributions - along with associated taxes such as VAT and business tax. Individual income tax rates range from 5% to 40% depending on salary, while social security contributions are comprised of the Labour Insurance Scheme and National Health Insurance. Both employers and employees are required to make joint social security contributions as a percentage of salary.
Employees must be issued with payslips for each pay period (these may be issued online), and payroll records must be kept for at least 10 years.