The BLI Reminded Business Entities to Deduct the Personal Voluntary Pension Contribution of Employees from the Declared Salary Income when Filing 2020 Tax Income Returns
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 2020 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 “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 NTD50,000 (applicable to the contribution level of NTD50,600) 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 2020 would be NTD700,000 (NTD50,000 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 2020 Tax Statement would be NTD36,432 (NTD50,6000 x 6% x 12 months). The gross consolidated income to be reported, therefore, should be NTD663, 568 (NTD700,000 - NTD36,432).
The BLI also reminded all workers who had personal voluntary pension contributions in 2020 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.