Voluntary Pension Contribution Should Be Deducted in Full from the Declared Salary Income of the Salary Withholding Certificate

Citizens will be expected to report their 2020 income tax starting from May 1, 2021. When filing tax returns, all workers who had personal voluntary pension contributions in 2020 should check and reconfirm that the voluntary pension contribution has been deducted in full from the declared salary income of the salary withholding certificate.

In accordance with Article 14 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. For example: The total monthly wage of a worker was NTD56, 000, and the total income from salary for the year 2020 was NTD784, 000 (including a year-end bonus). If the worker voluntarily contributed NTD41,616 (the contribution level of NTD57,800 x 6% x 12 months) to the labor pension, the total amount paid to be reported in the 2020 salary withholding certificate issued by the worker's company would be NTD742,384 (NTD784,000 - NTD41,616).

The BLI further pointed out that the voluntary pension contribution deducted from the declared salary income for the year shall not exceed 6% of the monthly contribution of NTD150, 000. In other words, the amount deducted from the declared salary income for the year is capped at NTD108, 000 (NTD150, 000 x 6% x 12 months). If the worker is employed by two or more employers, the amount deducted is still capped at NTD108, 000.

The BLI also reminded all workers that if the deduction of personal voluntary pension contributions was not made from the declared salary income or was incorrect, workers should inform the business entity to apply for a correction at the local branches or offices of the National Taxation Bureau as soon as possible, thereby avoiding overpayment of taxes.