With a large economy and key exports such as semiconductors and LCD panels, Taiwan is an attractive spot for companies looking to grow in Asia. But in order to establish a Taiwan payroll, you’ll first have to understand the country’s various labor laws, payroll regulations, and changing business factors to stay compliant.

Taxation rules in Taiwan

Employers in Taiwan have to consider taxes for both corporations and employees. Taiwan does not have any social security taxes, but employers and employees must contribute to nominal labor insurance and national health insurance premiums. Employers should budget around 20% of salary for statutory employment costs. Actual costs vary based on contribution bands, ceilings, and industry risk.

Taiwan tax-resident employees pay progressive individual income tax at marginal rates from 5% to 40%, based on taxable income.

Taiwan payroll options for companies

Companies have 3 main options for setting up a Taiwan payroll:

  • Internal: This option is best for larger companies that have an established subsidiary and enough resources to hire an HR team. This choice is the most expensive since you would need to learn all of Taiwan’s payroll laws and employ additional HR professionals.
  • Taiwan payroll processing company: You can outsource with a local Taiwan payroll processing company, which may give you more time to focus on your new branch. However, your company will still be held liable for their mistakes.
  • G-P: By partnering with an Employer of Record like G-P, you can expand your global footprint without the hassle of entity setup and management. With us, you can rest assured that all employees will be paid on time, freeing you to focus on other important aspects of your business.

How to establish payroll in Taiwan

Before you can start hiring and paying employees in Taiwan, you must establish a subsidiary or find a subsidiary alternative. There is no statutory minimum registered capital for an ordinary, non-regulated company. Declared capital must be contributed, verified, and sufficient for incorporation and initial operating costs. Regulated activities and work permit applications may require more.

Entitlement and termination

It is best practice to hire employees under a strong, written employment contract that includes entitlement and termination terms.

Taiwan has set restrictions for any termination of employment, and employers are only allowed to dismiss an employee under certain circumstances. Employers must give notice of termination and pay severance to the employee if they meet the country’s specific guidelines.

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