Payroll in Taiwan

Mercans is your trusted partner for premier payroll (Managed & SaaS) services in Taiwan. Our dedication to providing exceptional payroll solutions in Taiwan is unmatched. With extensive expertise in the payroll sector, Mercans delivers precise and compliant payroll services in Taiwan, positioning us as the preferred provider for businesses of all sizes. Rely on Mercans for punctual and accurate payroll processing, coupled with the convenience of multi-currency payments in the Taiwanese market. As your reliable local payroll provider in Taiwan, we feature a team of in-country payroll specialists with profound understanding of local regulations, delivering comprehensive assistance for a seamless payroll experience tailored to your specific business requirements.

Everything you need to know before running payroll in Taiwan

Payroll Cycle, Working Hours and Overtime

Payroll Cycle

Employees’ salaries are typically deposited directly into their bank accounts on the agreed payday. Under Taiwan’s Labor Standards Act, wages must generally be paid on a regular basis at least twice a month unless otherwise agreed by the parties or wages are paid monthly in advance.

Employers are required to provide employees with payslips or wage calculation details, although the format can be flexible.

Final Pay and Termination

Upon termination of employment, employers should settle outstanding wage items and, where applicable, severance in accordance with statutory deadlines. Under the Labor Standards Act, statutory severance must be paid within 30 days after the labor contract is terminated.

Calculation and Timeliness

Employers are responsible for accurate and timely payment of employees’ wages. Employees must provide all necessary information, such as work hour records, for accurate payroll calculation.

Late payments can result in orders from the competent authority for the employer to pay within a specified period, as per Article 27.

Time Limits and Sick Pay

There are time limits for both unpaid wages and lawsuits related to unpaid wages.

Employees are entitled to ordinary sick leave. For non-hospitalized sickness, the entitlement is less than 30 days in one year and is generally paid at 50% of salary. For hospitalized sickness, leave may extend up to one year within two years. If Labor Insurance payments do not cover at least fifty percent of salary, the employer must compensate for the difference.

Working Hours

Working arrangements vary by industry and employer policy. Under the Labor Standards Act, the regular working time generally may not exceed 8 hours per day and 40 hours per week, subject to flexible arrangements and legally permitted exceptions.

Overtime

Employers are generally required to provide workers with two days off every seven days, consisting of one regular leave day and one rest day. Overtime must be compensated in accordance with the Labor Standards Act.

Employees are generally allowed up to 46 hours of overtime per month. With the consent of the labor union or labor-management meeting, overtime may be extended up to 54 hours per month, provided that total overtime does not exceed 138 hours in any three-month period. Employers may also provide compensatory leave in lieu of overtime pay if agreed with the employee.

Wage Rates on Workdays

Hours Tax Rate

• Up to the first 2 overtime hours on a workday: at least an additional one-third of the regular hourly rate
• Over 2 hours, up to 4 overtime hours on a workday: at least an additional two-thirds of the regular hourly rate

Minimum Wages and 13th Month Salary

Minimum Wages

As of January 1, 2026, Taiwan’s minimum wage is NT$29,500 per month and NT$196 per hour.

13th Salary

It is common market practice in Taiwan to provide a 13th-month salary or year-end bonus, often around the Lunar New Year period. However, this is not a statutory entitlement unless provided by contract, policy, or collective arrangement.

Company Formation in Taiwan

Many foreign companies entering Taiwan opt to utilize a local agent or distributor initially to establish a presence in the business community. Incorporating a branch office, representative office, or locally incorporated company is more suitable for markets of considerable size or for foreign firms seeking to establish a lasting market presence. Taiwanese investment policy permits foreigners to invest in most business sectors, except those listed on the Negative List or otherwise restricted by law. Foreign investment cases are subject to approval or review by the competent authorities in Taiwan, including the Ministry of Economic Affairs where applicable. The Taiwan Company Act allows for the establishment of four types of companies:

• Subsidiary
• Partnership
• Foreign Branch
• Representative Office

Business Establishment Steps

• Selecting a company name and conducting a search to ensure its availability.
• Applying for foreign investment approval or review where required.
• Registering the company.
• Registering a business address.
• Opening a bank account.
• Registering trademarks, if needed.
• Completing tax registration.
• Registering with labor insurance, national health insurance, and labor pension authorities where applicable.
• Several steps can be completed online through Taiwan’s Company, Business and Limited Partnership One-stop Service Request system, depending on the case.

Subsidiary

Establishing a subsidiary in Taiwan is typically favored by foreign entities seeking to create a limited company in the country. This method of incorporation is more complex compared to representative offices and branches due to the incorporation procedure and documentation requirements. There are several forms of subsidiaries available to foreign companies, including unlimited companies, unlimited companies with limited liability shareholders, limited companies, and companies limited by shares. Most subsidiaries are incorporated through a limited company or a company limited by shares.

Companies incorporated in this manner are generally subject to the Taiwan Company Act and other applicable regulations. Each shareholder is generally liable for the company up to the amount of capital contributed. A foreign company can be the sole corporate shareholder of a limited company or a company limited by shares, except in restricted sectors. The company must have at least one shareholder.

There are no general minimum capital requirements for a limited company or company limited by shares unless it operates in a sector requiring special permits or approvals. In practice, however, the paid-in capital should be adequate to cover setup costs and support the business plan. Additional practical thresholds may apply where the company intends to sponsor work permits for foreign professionals.

The incorporation procedure involves several steps:

Apply for Search and Reservation of Company Name:

• Submit an application to search for and reserve a company name, either online or in person through the competent authorities of the Ministry of Economic Affairs.

Apply for Foreign Investment Approval

• Foreign investors generally must obtain approval or complete review procedures for inbound investment before completing incorporation. Documents may need to be authenticated or notarized and accompanied by a Chinese translation.

Apply for Examination of Investment Capital

• The investment capital for foreign companies may need to be verified in accordance with the relevant incorporation and investment rules after remittance into Taiwan.

Apply for Company Registration

• Submit the articles of incorporation and required documents for company registration within the applicable filing period after investment approval.

Apply for Importer/Exporter English Name and Registration

• Where relevant, reserve a trading name for importing and exporting and complete the related registration.

Apply for Business Registration

• Complete business and tax registration with the national tax authority after company registration.

Apply for Factory Registration in Industrial Parks

• A longer and more comprehensive registration procedure may be required for companies conducting manufacturing activities if needed.

Payroll Taxes

Social Security in Taiwan

In Taiwan, there are mandatory social security programs that require contributions from employers and employees, calculated based on the insured salary and subject to applicable caps and salary grade tables. These programs generally include Labor Insurance, Employment Insurance, National Health Insurance, and the Labor Pension system, depending on the employee’s status and eligibility.

From January 1, 2026, the National Health Insurance tables were updated. Labor Insurance ordinary insurance is 11.5% in 2026, and Employment Insurance continues as a separate 1% levy on the insured salary. Employers must also contribute no less than 6% of monthly wages to the individual labor pension accounts of employees covered by the Labor Pension Act.

From January 1, 2026, foreign professionals are covered by the New Labor Pension System under the Labor Pension Act, with transitional rules for certain existing employees.

Personal Income Tax in Taiwan

Individual Income Tax (IIT)

Income tax is imposed on income sourced in Taiwan for both residents and non-residents, unless exempted under the provisions of the Income Tax Act and other applicable laws.

A non-resident alien staying in Taiwan for not more than 90 days in a calendar year is generally taxed by withholding at source on Taiwan-sourced income, while salary paid by an overseas employer for services rendered in Taiwan is generally exempt in that case. For non-resident aliens residing in Taiwan for more than 90 days but less than 183 days in a calendar year, Taiwan-sourced salary income is generally subject to withholding and tax filing rules for non-residents, including remuneration paid from abroad for services rendered in Taiwan.

Resident aliens who stay in Taiwan for 183 days or more in a tax year are subject to progressive income tax rates on net consolidated income, as follows for 2026:

• NT$0 to NT$610,000: 5%
• NT$610,001 to NT$1,380,000: 12%
• NT$1,380,001 to NT$2,770,000: 20%
• NT$2,770,001 to NT$5,190,000: 30%
• NT$5,190,001 and above: 40%

Income Basic Tax (IBT)

In addition to regular income tax under the Income Tax Act, Taiwan imposes IBT at a flat rate of 20% on individuals who are tax residents in Taiwan, including expatriates staying in Taiwan for 183 days or more in a tax year. Foreign-sourced income is included in the IBT calculation if the applicable statutory thresholds are met.

Under the IBT Act, taxpayers must calculate the IBT due on income subject to IBT after adding back certain items and compare it with the regular income tax payable. If IBT payable exceeds regular income tax payable, taxpayers must calculate and pay the difference accordingly.

Add-back items include qualified insurance benefits, income from the transaction of beneficiary certificates of privately-placed securities investment trust funds, non-cash charitable donations, and foreign-sourced income above the applicable threshold.

Payroll Compliance in Taiwan

Mercans ensures payroll is processed compliantly as per the Taiwanese labor laws.

Government Requirements

• Registration necessities
• Social Insurance: Includes labor insurance, employment insurance where applicable, and national health insurance. Labor Insurance is compulsory for covered workers and National Health Insurance provides medical coverage for childbirth, illness, or injury, with participants paying monthly premiums according to insured salary and category.

Pension Requirements

• Registration needs: Employers must contribute to retirement support under the Labor Standards Act or the Labor Pension Act, depending on the applicable scheme and worker category.
• Ongoing Compliance: Employers contribute a minimum of 6% of monthly wages to the labor pension fund for employees covered by the Labor Pension Act. Employees may voluntarily contribute up to 6% of their monthly wages. Contributions may be deducted from taxable income where permitted. From January 1, 2026, foreign professionals are also brought into the New Labor Pension System, subject to transitional rules for certain existing employees.

Employment Obligations

• Employment Law: Governed primarily by the Labor Standards Act, which stipulates minimum wages, working hours, holidays, leave, and other working conditions. Additional rules under the Act of Gender Equality in Employment and related laws cover equality, parental protections, and family-related leave.

Payroll Requirements

• Payroll Payments: Wages must generally be paid at least twice a month unless otherwise agreed, and employers must maintain a worker payroll roster for record-keeping purposes for at least five years.

Banking Requirements Related to Payroll

• Payment Methods: Payroll payments can be made via cash, check, or electronic funds transfer (EFT), subject to the employer’s arrangements and the employee’s agreement. When paying in cash, employers should maintain supporting records. Withholding tax for foreign currency payments is based on the applicable exchange rate on the payment date. Foreign exchange and remittance rules may apply to subsidiaries and branch offices.

Statutory Reports

Mercans assists you with the following statutory reports in Taiwan.

• LI & NHI Certificate
• New Labor Pension Certificate
• New Pension Contribution Statement
• Supplementary NHI Report
• Supplementary NHI Cost Breakdown Report
• Demand Notice for Tax Withheld on Salary Income
• Demand Notice For Tax Withheld on Various Income
• Employee Withholding and Non-Withholding Tax Statement
• Company Tax Statement
• Monthly WH Report
• Entry Reports for Both Tax and Social security
• Exit Reports for Both Tax and Social Security

Employee Benefits in Taiwan

Mandatory Benefits

• Labor Insurance (LI): Provides coverage for injury, sickness, disability, old age, and death benefits, subject to the applicable rules and insured categories.
• Employment Insurance (EI): Offers unemployment and related benefits under its own legal framework.
• National Health Insurance (NHI): Comprehensive coverage for medically necessary services, including inpatient, outpatient, dental, traditional Chinese medicine, and prescription drugs, with premiums shared among employees, employers, and the government.
• Labor Pension Act (LPA): Employers contribute to an individual labor pension account for covered workers, which remains portable when employees change jobs.

Supplementary Benefits

Common group benefits include:

• Death Benefit: Typically term life or accidental death and dismemberment coverage.
• Critical Illness: Covers serious illnesses depending on the policy design.
• Medical Insurance: Coverage options may include accidental medical, hospital, surgical, and cancer indemnity.
• Occupational Hazard: Additional protection may be offered to complement statutory coverage when work-related incidents occur.

Perks

Taiwanese employers often provide additional perks such as:

• Car and transportation allowances
• Meal allowances or subsidized eating facilities
• Mobile phone allowances
• Employee loans (less common)
• Service awards
• Education allowances
• Shopping discounts

These benefits and perks contribute to the overall well-being and satisfaction of employees in Taiwan’s workforce.

Leave Entitlements in Taiwan

Public Holidays

Taiwan observes statutory holidays under the applicable holiday calendar and labor rules. Public holidays are paid and typically include major national and lunar-calendar holidays such as:

• New Year
• Peace Memorial Day
• Children’s Day
• Qing Ming Festival
• Labor Day
• Dragon Boat Festival
• Mid-Autumn Festival
• National Day
• Lunar New Year related holidays

Accruals:

Employees are entitled to Paid Time Off (PTO) or annual leave based on their years of service:

• 3 days for over six months but less than one year
• 7 days for over one year but less than two years
• 10 days for over two years but less than three years
• 14 days for over three years but less than five years
• 15 days for over five years but less than ten years
• Additional day for each year over ten (up to 30 days)

Employers must inform employees of their annual leave entitlements and track unused annual leave in accordance with the law.

Rollovers and Payouts:

Unused annual leave is handled in accordance with Article 38 of the Labor Standards Act. Unused leave generally must be paid out at year-end or at termination unless a lawful carryover arrangement applies.

Maternity Leave and Others:

• Maternity leave: 8 weeks before and after childbirth combined.
• Miscarriage leave is granted based on the stage of pregnancy in accordance with the Act of Gender Equality in Employment.
• Pregnancy checkup accompaniment and paternity leave: 7 days with regular wages.
• Parental leave: Eligible employees who have worked for the employer for at least 6 months may apply for unpaid parental leave before a child reaches 3 years of age, subject to statutory conditions. From 2026, part of this entitlement may be taken more flexibly on a daily basis within the applicable limits.

Sick Leave and Family Care Leave:

• Ordinary sick leave: less than 30 days in one year if not hospitalized, generally at half pay.
• Hospitalized sick leave: up to one year within a two-year period.
• Family care leave: up to 7 days of unpaid leave per year, counted within personal leave entitlement. From 2026, family care leave may be taken more flexibly on an hourly basis under the updated rules.

Jury Duty, Voting, and Bereavement Leave:

• Leave for public duties is granted, and bereavement leave is provided for different family relationships.

The pay status of each leave type depends on the applicable law and leave category.

Benefits of Payroll Outsourcing in Taiwan

In Taiwan, Mercans prioritizes data security and privacy in our payroll services. Our approach integrates industry-leading security measures, aligning with international standards such as ISO 27001, ISAE3402, GDPR, SOC, and OWASP. This ensures robust protection of sensitive data throughout our operations.

Key Highlights of Our Payroll Services

• High Safety Standards:
  • Our payroll tool incorporates stringent security measures to safeguard sensitive data.
  • ISO 27001 and ISAE3402 certifications ensure adherence to the highest information security protocols.
• Adequate and Sustainable Performance:
  • We guarantee consistent and sustainable performance to meet the dynamic demands of payroll services.
• Flexibility and Scalability:
  • Our services offer flexibility and scalability to adapt to evolving client needs and changing business environments.
• Collaborative Cloud Tool:
  • Utilizing a Cloud-based platform facilitates collaborative work, promoting efficiency and accessibility across teams.

Key Features of Our Electronic Payroll Support:

• Full Traceability: Our process ensures traceability from generation to transmission and validation, meticulously validated by our expert team.
• Efficiency in Human Resources: Streamlining the payroll settlement process enhances efficiency in the human resources area, resulting in significant time savings.
• Certified Suppliers: Partnering with ISO 27001-certified suppliers ensures secure data transmission processes, bolstering the integrity of our services.

With adherence to ISO 27001 and ISAE3402 certifications, Mercans assures clients of top-tier information security standards, providing peace of mind alongside state-of-the-art payroll solutions.

Payroll Solutions in Taiwan

Unlock the potential of seamless payroll processing in Taiwan with Mercans’ Global Payroll Solutions. Our adaptable models ensure local compliance, support multi-currency transactions, and integrate seamlessly with global Human Capital Management (HCM) and Enterprise Resource Planning (ERP) systems. Ensuring accurate payments has never been easier.

Discover Our Adaptable Models:

• Software as a Service (SaaS): Tailored for enterprise businesses managing payroll across multiple countries, our SaaS model simplifies operations amid diverse data points, locations, currencies, and languages, enhancing overall efficiency.
• Managed Services: Designed for mid-sized and large enterprise businesses, our Managed Services model caters to those handling multi-country payroll, providing on-demand HR expertise to ensure security, reliability, and compliance.

Experience payroll solutions tailored to the unique requirements of your business in Taiwan and beyond, with Mercans leading the way.

Streamline Payroll with Mercans’ Technology and Integrations

• Technology: Explore the forefront of innovation with Mercans’ cutting-edge technology that powers our global payroll solutions. Learn more about our technological prowesshere
• Integrations: Seamlessly integrate your Human Capital Management (HCM) systems with Mercans’ solutions, enhancing efficiency and connectivity. Discover the power of integrationhere.
• Recognitions: Join a partner recognized for excellence. Mercans has earned accolades for its commitment to delivering exceptional payroll services. Explore our awards and recognitions here.