Payroll Guide for Taiwan

Employee Benefits and Deductions

Employers in Taiwan are required to provide statutory benefits to employees, including paid leave, pension contributions, and social insurance coverage. These benefits must be properly accounted for in the payroll process to ensure compliance with labor laws.

Statutory Leave Entitlements and Benefits

Employees in Taiwan are entitled to various types of paid leave, including:

• Annual Leave: Employees are entitled to annual leave based on their years of service. After one year of continuous employment, employees are entitled to seven days of paid annual leave. This entitlement increases with length of service.
• Sick Leave: Employees are entitled to up to 30 days of paid sick leave per year at half pay. Beyond this, they may take unpaid sick leave.
• Maternity Leave: Female employees are entitled to eight weeks of paid maternity leave. Employers must ensure that maternity leave is fully paid and provided in accordance with labor laws.

In addition to these statutory benefits, employers must provide labor insurance and health insurance coverage for all eligible employees.

Labor Insurance, Health Insurance, and Pension Deductions

Employers must deduct labor insurance, health insurance, and pension contributions from their employees’ salaries. These deductions must be clearly itemized on the employee’s payslip, and the employer is responsible for submitting the contributions to the relevant authorities by the due date.

When Non-Compliance May Occur

Failure to comply with payroll regulations in Taiwan can lead to serious consequences, including fines, legal disputes, and damage to the company’s reputation. Below are some common areas where non-compliance may occur and how to avoid them:

Late Salary Payments

Employers must pay salaries on time, as outlined in the employment contract. Late payments can result in employee disputes and fines under Taiwanese labor law. Employers should implement reliable payroll systems to ensure that salaries are paid accurately and on time.

Missed Labor or Health Insurance Contributions

Employers who fail to make labor insurance or health insurance contributions by the deadline may face penalties, including fines and interest charges. To avoid missing these deadlines, businesses should automate their payroll processes and ensure that contributions are submitted on time.

Incorrect Income Tax Withholding

Employers are responsible for calculating and withholding the correct amount of income tax from their employees’ salaries. Failure to do so can result in penalties from the National Taxation Bureau. Employers must ensure that their payroll systems are up-to-date with the latest tax rates and regulations to avoid errors.

Non-Compliance with Employee Benefits

Employers who fail to provide statutory benefits, such as paid leave, labor insurance, or health insurance, may face legal claims from employees. It is essential to stay informed about Taiwan’s labor laws and ensure that all statutory benefits are provided as required.

How AYP Can Help

Managing payroll in Taiwan can be challenging, especially for businesses unfamiliar with the country’s labor and tax regulations. AYP provides comprehensive payroll services to help businesses stay compliant with local laws while minimizing the administrative burden of payroll management.

Professional Employer Organisation (PEO) Services

AYP’s PEO services allow businesses to outsource their payroll management, ensuring that salary payments, tax withholdings, and social insurance contributions are handled accurately and in compliance with Taiwanese regulations.

Employer of Record (EOR) Services

As an Employer of Record, AYP takes on the legal responsibility for your workforce in Taiwan. We manage payroll, tax reporting, and employee benefits, ensuring that your business remains compliant with local labor and tax laws.

Payroll Outsourcing Management (POM) Services

AYP’s Payroll Outsourcing Management (POM) services provide end-to-end payroll solutions, from calculating salaries and deductions to submitting labor insurance and tax contributions. By outsourcing payroll to AYP, businesses can focus on growth while ensuring compliance with Taiwanese payroll regulations.