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The BLI Reminded Business Entities to Exclude the Personal Voluntary Pension Contribution of Employees from Salary when Filing 2021 Tax Income Returns

It is the time of year for reporting the 2021 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 total amount paid of the 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 in the field for “The Amount of Voluntary Contribution According to the Labor Pension Act”, and the voluntary contributions should be deducted from the total amount paid.

The BLI provided the following example. Assuming that the total monthly wage of a worker was NTD57,000 (applicable to the contribution level of NTD57,800) 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 2021 would be NTD798,000 (NTD57,000 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 2021 Tax Statement would be NTD41,616 (NTD57,800 x 6% x 12 months). The total amount paid to be reported, therefore, should be NTD756,384 (NTD798,000 - NTD41,616).

The BLI also reminded all workers who had personal voluntary pension contributions in 2021 that, when filing their tax returns in 2022, they should check and reconfirm that the voluntary pension contribution had been deducted in full from their declared salary 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.
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Last Update:2022-01-12