The BLI Reminded Business Entities to Deduct the Personal Voluntary Pension Contribution of Employees from Salary when Filing 2023 Tax Income Returns

It is the time of year for reporting the 2023 Withholding and Non-withholding Tax Statements. The BLI reminded all business entities that, for those employees with personal voluntary pension contribution, the employer should deduct the entire personal voluntary pension contribution of such employees from the gross salary income, so as to avoid overpayment of taxes by the employees.

As the BLI explained, in accordance with Article 14, Paragraph 3 of the Labor Pension Act, workers might voluntarily contribute up to 6% of their monthly wage to the labor pension, which would not be included in the income tax withheld from their annual salary. Therefore, when preparing the Withholding and Non-withholding Tax Statement, business entities should report the accurate amount of workers’ voluntary pension contributions during the year in the field for “Voluntary Contribution According to the Labor Pension Act”, and the voluntary contributions should be deducted from the gross consolidated income.

The BLI provided the following example. Assuming that the total monthly wage of a worker during year 2023 was NTD43,000 (applicable to the contribution level of NTD43,900) 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 2023 would be NTD602,000 (NTD43,000 x 14 months). If the voluntary monthly contribution rate of the worker was 6% in 2023, the amount of his/her “Voluntary Contribution According to the Labor Pension Act” in the 2023 Tax Statement would be NTD31,608 (NTD43,900 x 6% x 12 months). The gross consolidated income to be reported, therefore, should be NTD570,392 (NTD602,000 - NTD31,608).

The BLI also reminded all workers who had personal voluntary pension contributions in 2023 that, when filing their tax returns in 2024, 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 avoiding any overpayment of tax and protecting their own rights.