1. Understanding Gross Salary and Allowances
In Taiwan, the gross salary refers to the total monthly compensation, including base salary and any allowances, before deductions.
| Component | Description | Amount (TWD) | Amount (USD) |
|---|---|---|---|
| Monthly Gross Income | Total monthly compensation before deductions | 10,000 | 308.45 |
| Monthly Allowance | Additional payments for specific needs (e.g., housing, transport) | 1,000 | 30.85 |
| Total Gross Salary | Total of base salary and allowances | 11,000 | 339.30 |
2. Employer Contributions (Burden on Employer)
In Taiwan, employers are required to make contributions to various social programs, such as labor pensions, health insurance, and workers’ compensation. These contributions are calculated based on the total income of the employee.
| Contribution Type | Employer’s Rate | Amount (TWD) | Amount (USD) | Details / Logic Behind the Burden |
|---|---|---|---|---|
| Arrear Wage | 0.025% of the Total Income | 2.75 | 0.08 | A small portion of the salary for arrear wages, capped at 45,800 TWD. |
| Labour Pension (LIP) | Fixed at 1,648 TWD | 1,648 | 50.83 | Fixed contribution for Taiwan’s mandatory pension scheme. |
| National Health Insurance Program (NHIP) | Fixed at 1,329 TWD | 1,329 | 40.99 | Fixed amount for Taiwan’s national health insurance program. |
| Worker’s Compensation | 0.14% of Gross Income | 14 | 0.43 | A small percentage for workers’ compensation, capped at 72,800 TWD. |
3. Total Employer Contribution Cost
The total employer contribution includes all mandatory social security and contingency payments.
| Total Employer Contribution Cost | Amount (TWD) | Amount (USD) | Percentage of Gross Salary |
|---|---|---|---|
| Total Employer Contribution Cost | 2,993.75 | 92.34 | 27.22% |
4. Breakdown of Employer Contribution Costs
For an employee earning 10,000 TWD monthly (gross salary including allowance), the employer’s contributions are calculated as follows:
| Contribution Type | Employer Contribution (TWD) | Calculation Explanation | Cap Amount (TWD) |
|---|---|---|---|
| Arrear Wage | 2.75 | 0.025% of total income (11,000 × 0.025%) | 45,800 |
| Labour Pension (LIP) | 1,648 | Fixed amount for Taiwan’s pension system | – |
| National Health Insurance Program (NHIP) | 1,329 | Fixed amount for national health coverage | – |
| Worker’s Compensation | 14 | 0.14% of gross income (10,000 × 0.14%) | 72,800 |
Total Employer Contribution Cost: 2,993.75 TWD (92.34 USD)
5. Income Tax and Salary Payments
Taiwan’s tax system applies the following rates based on annual income:
| Income (TWD) | Tax Rate |
|---|---|
| Up to 540,000 | 5% |
| 540,001 to 1,210,000 | 12% |
| 1,210,001 to 2,420,000 | 20% |
| 2,420,001 to 4,530,000 | 30% |
| Above 4,530,000 | 40% |
Taxable Income Example
For an employee earning 10,000 TWD monthly (120,000 TWD annually):
- Standard Deduction: 120,000 TWD (for single individuals).
- Taxable Income: 0 TWD after deduction, so no tax payable.
For higher earnings, tax is calculated based on the applicable rates above.
Salary Payment Schedule
- Standard Working Hours: 8 hours per day, 40 hours per week.
- Salary Payment: Salaries are paid monthly, usually by the 10th of the following month.
6. Working Hours and Pay Schedule
| Category | Details |
|---|---|
| Standard Working Hours | 40 hours per week (8 hours per day) |
| Overtime | Paid at 1.5x the standard hourly rate |
| Pay Schedule | Salaries must be paid monthly, by the last day of the month |
7. How GlobainePEO Eases Payroll Management in Taiwan
Partnering with GlobainePEO helps businesses in Taiwan ensure that payroll is handled in full compliance with local labor laws, while managing employer costs efficiently.
- Compliance Assurance: Ensure compliance with Taiwan’s complex social security and tax regulations.
- Simplified Payroll Processing: Efficiently manage deductions for pensions, health insurance, and other statutory contributions.
- Local Expertise: Benefit from local knowledge and expertise on Taiwan’s labor market and contribution system.
- Cost Efficiency: Minimize administrative costs and risks associated with managing employee payroll.
8. Summary Table: Payroll Breakdown in Taiwan (TWD)
| Category | Amount (TWD) | Amount (USD) | Percentage of Gross Salary | Details / Logic Behind the Burden |
|---|---|---|---|---|
| Monthly Gross Income | 10,000 | 308.45 | 90.91% | Total salary before deductions or allowances. |
| Monthly Allowance | 1,000 | 30.85 | 9.09% | Additional payments for specific needs (housing, transport, etc.). |
| Arrear Wage | 2.75 | 0.08 | 0.02% | Small portion for arrear wages, capped at 45,800 TWD. |
| Labour Pension (LIP) | 1,648 | 50.83 | 14.98% | Fixed contribution for Taiwan’s pension system. |
| National Health Insurance Program (NHIP) | 1,329 | 40.99 | 12.08% | Fixed contribution for health coverage under the national system. |
| Worker’s Compensation | 14 | 0.43 | 0.12% | Small percentage for workers’ compensation, capped at 72,800 TWD. |
| Total Employer Contribution Cost | 2,993.75 | 92.34 | 27.22% | Total employer contributions (pension, health insurance, etc.). |
| Overall Cost (Total Gross + Employer Contributions) | 13,993.75 | 431.64 | 100% | Total cost of employment, including salary, allowances, and employer contributions. |
How GlobainePEO Can Help with Payroll in Taiwan🌐
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