Taiwan does not impose a complicated or onerous tax system on foreign companies operating in the country. The primary concerns for a foreign company that needs to comply with tax laws in Taiwan are: Individual income tax for employees in Taiwan, social security costs, VAT, withholding tax, business tax and permanent establishment concerns.
A remote payroll in Taiwan is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Taiwan. This applies to both local and foreign employees. One option for a non-resident company to payroll its employees (local and foreign) in Taiwan is to use a fully outsourced service like a GEO or PEO which will employ and payroll the staff on their behalf.
In some cases, a company will register their business in China under one of the forms available, (RO, WFOE or JV) but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.
Larger companies with a commitment to Taiwan may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Taiwanese payroll, and can fulfill all tax, withholding, and payroll requirements.
This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Taiwanese employment laws.
Companies can outsource the employment and payroll of their staff in Taiwan to a GEO, like Shield GEO. This is possible for both foreign workers and Taiwan nationals. This is the easiest, fastest and safest way to payroll staff in Taiwan.
Shield GEO manages all aspects of payroll for workers in Taiwan, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.
Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.
Read more about outsourced payroll and employment through Shield GEO.
Taiwan Dollar (NTD)
|Corporate Income Tax ?||
Company tax rate: 17% at a NT$120,000 threshold level
|Income Tax Rate ?||
|Sales Tax ?||
The sales tax in Taiwan is known as the business tax (BT) and is imposed through the VAT and non-VAT system.
The basic rate of the BT is 5%.
Exports, export-related services, items sold by duty-free shops, goods sold to export-oriented entities in tax-free export zones and goods sold to a bonded factory are exempt from this sales tax.
|Withholding Tax ?||
Dividends: 20% imposed on dividends paid to a nonresident, unless it is reduced by a tax treaty.
Interest: 15% imposed on interest to a nonresident, unless it is reduced by a tax treaty.
Royalties: 20% imposed on royalties paid to a nonresident, unless it is reduced by a tax treaty.
|Employee Social Security (EE SS)||
No social security taxes are levied in Taiwan, but nominal labor insurance premiums and national health insurance premiums are imposed by all business entities to the employee.
Labor Insurance Scheme: 1.8%
National Health Insurance Scheme: 1.4731%
|Employer Social Security (ER SS)||
No social security taxes are levied in Taiwan, but nominal labor insurance premiums and national health insurance premiums are imposed by all business entities.
Labor Insurance Scheme: 6.35%
National Health Insurance Scheme: 5.008%