Business Entities Must Deduct Workers’ 2019 Voluntary Pension Contributions from the Declared Salary Income
It is the time of year for business entities to report the annual tax withholding of its employees. The Bureau of Labor Insurance (BLI) reminded all business entities that they should deduct the entire personal voluntary pension contribution of employees from gross income in 2019 so as to avoid overpayment of taxes by employees.
As the BLI explained, in accordance with Article 14, Paragraph 3 of the Labor Pension Act, workers may voluntarily contribute up to 6% of their monthly wage to the labor pension, which will not be included in the income tax withheld from their annual salary. Therefore, when preparing the Withholding and Non-withholding Tax Statement, business entities shall report the accurate amount of workers’ voluntary pension contributions in the field for “ The Amount of Voluntary Contribution According to the Labor Pension Act”, and the voluntary contributions shall be deducted from the gross consolidated income.
The BLI provided the following example. Assuming that the total monthly wage of a worker was NT$55,000 (applicable to the contribution level of NT$ 55,400) 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 2019 would be NT $770,000 (NT$55,000 x 14 months). If the voluntary contribution rate of the worker was 6%, the amount of his/her “The Amount of Voluntary Contribution According to the Labor Pension Act” in the 2019 Tax Statement would be NT$39,888 (NT$55,4000 x 6% x 12 months). The gross consolidated income to be reported, therefore, should be NT$730,112 (NT$770,000 - NT$39,888).
The BLI also reminded all workers who had personal voluntary pension contributions in 2019 that, when filing their tax returns in 2020, 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.