Most Taiwanese company includes an item of “food allowance” as much as TWD 2,400 in their salary. The reason is that, for the employee, the definition of taxable salary income covers all kinds of payment received from the employer. They include base salaries, stipends, wages, allowances, annuities, cash awards, bonuses and all kinds of subsidies. However, the food allowance as much as TWD 2,400 per month is an exception and can be exempted from the taxable salaries. Therefore, most Taiwanese companies provide employees with such food allowance.
Salaries payable
As mentioned in the overview section, labor and health insurance premiums are partly contributed by the employee, and therefore the employer should deduct these portions when paying salary. From column (f), we can observe that the employee receive 96~98% of the salary. (We ignore the withholding tax on salary since it is a deductible credit to the employee’s individual income tax. )
Exemplary deductions of NHI and labor insurance premium
| Monthly Regular Salary in TWD(a) | Monthly Regular Salary in USD (b=a/31) | Labor Insurance Premiums Paid by the Employee (c) | NHI Premium Paid by the Employee (d) | Net Salary (e=a-c-d) | Net Salary Rate (f=e/a) |
|---|---|---|---|---|---|
| 30,000 | 968 | 667 | 426 | 28,907 | 96% |
| 50,000 | 1,613 | 1,008 | 712 | 48,280 | 97% |
| 70,000 | 2,258 | 1,008 | 1,024 | 67,968 | 97% |
| 90,000 | 2,903 | 1,008 | 1,296 | 87,696 | 97% |
| 110,000 | 3,548 | 1,008 | 1,549 | 107,443 | 98% |
| 130,000 | 4,194 | 1,008 | 1,853 | 127,139 | 98% |
| 150,000 | 4,839 | 1,008 | 2,111 | 146,881 | 98% |
| 170,000 | 5,484 | 1,008 | 2,471 | 166,521 | 98% |
Withholding tax on salary
The wage withholding system requires withholding for income taxes on payments by employers to employees. Income tax for the employee for the year is generally determined upon filing a tax return after the end of the year. The amount withheld and paid by the employer to the government is applied as the employee’s prepayment of income taxes and is refundable if it exceeds the income tax liability determined on the employee’s filing the tax return.