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 17% of their employees’ salaries as a cost paid to the authorities.
Employees are responsible for paying progressive income tax in Taiwan depending on their salary, and the tax rate ranges from 5% to 40%.
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. You will need at least TWD 500,000 to register your company and submit all the necessary documentation, apply for any work permits, and establish a bank account in the country.
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.
Streamline global payroll management with G-P.
G-P streamlines each step of the payroll management process with our market-leading Global Growth Platform™. Pay employees with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.
Contact us to learn more about how we can support you.