The BLI Reminded Business Entities to Deduct the Personal Voluntary Pension Contribution of Employees from Salary when Filing 2018 Tax Income Returns

It is again the time of year for business entities to report the annual tax withholding of its employees. The Bureau of Labor Insurance (the BLI) reminded all business entities that, when preparing 2018 Withholding and Non-withholding Tax Statement for the employees participating in the New Labor Pension System, they should deduct the entire personal voluntary pension contribution of employees from gross income so as to avoid overpayment of taxes by the employees.

The BLI indicated that, according to Article 14, Paragraph 3 of the Labor Pension Act, workers may voluntarily contribute up to 6% of their monthly wage to the labor pension. The amount of labor pension voluntarily contributed may be deducted from the gross consolidated income of the year. In the Withholding and Non-withholding Tax Statement currently in use, there is a field for “Voluntary Contribution According to the Labor Pension Act”. All business entities are urged to report the voluntary contribution amount accurately, which should be deducted from the gross consolidated income.

To further explain, the BLI provided the following example. Assuming that the total monthly wage of a worker was NT$50,000 (applicable to the contribution level of NT$50,600) and he/she was entitled to a year-end-bonus equal to two months’ wages, the total income from salary of the worker for the year 2018 would be NT$700,000 (NT$50,000 x 14 months). If the voluntary contribution rate of the worker was 6%, the amount of his/her “Voluntary Contribution According to the Labor Pension Act” in the 2018 Tax Statement would be NT$36,432 (NT$50,6000 x 6% x 12 months). The gross consolidated income to be reported, therefore, should be NT$663,568. (NT$700,000 - NT$36,432).

The BLI also reminded all workers who had personal voluntary pension contributions in 2018 that, when filing their tax returns in 2019, they should check and reconfirm that the voluntary pension contribution has been deducted in full from their personal gross consolidated income for the year. If the deduction was not made or was incorrect, the worker should inform the business entity to apply for correction at the local branches or offices of the National Taxation Bureau as soon as possible, thereby protecting his/her rights and interests.