An Employer of Record (EOR) in Taiwan is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.
Discover the key considerations and essential details you should be aware of before hiring in Taiwan through an employer of record (EOR).
| Overview | |
| Continent | Asia |
| Country | Taiwan |
| Capital | Taipei |
| Time zone | UTC+08:00 |
| Total Time zones | 1 |
| Working hours per week | 40 |
| Working week | Monday–Friday |
| Typical hours worked | 8 |
| Personal Tax filing deadline | 31st May |
| Financial Year | 1st January to 31st December |
| Date format | yyyy/mm/dd |
| Currency | New Taiwan Dollar (TWD) |
| VAT | the standard rate is 5% |
Employment Contracts in Taiwan
There are two types of employment contracts in Taiwan: fixed-term and indefinite contracts. The Taiwan government encourages non-fixed-term contracts to protect the rights of employees, including notice periods. Strict employment laws govern fixed-term contracts and are allowed only in exceptional cases.
Types of Employment Contracts:
- Temporary employment: Due to an unexpected increase in workload and can be completed before six months, non-continuous.
- Short-term employment: Planned work that can be completed before six months.
- Seasonal employment: Non-continuing employment affected by seasonal factors, such as raw materials, material sources, or market sales, with a term of employment shorter than nine months.
- Specific employment: Non-continuous employment expected to complete in a certain duration, such as a research project or a project that requires special skills.
The maximum allowed length of a fixed-term contract is based on the nature of the work - 6 months for temporary work, 9 months for seasonal work, and up to 1 year for specific cases. Employers are required to inform the labor authority, the Ministry of Labor Republic of China, for specific cases.
Fixed-term contracts will be regarded as indefinite contracts if the labor laws are violated by the employers. Temporary and short-term contracts are considered indefinite contracts upon expiration in the following cases:
- Employees continue to work after the contract expires with no objection from the employer.
- If the employee signs a new contract, and the total contract duration exceeds 90 days, with a gap of less than 30 days between the old and new contracts.
According to the Taiwan Labor Standards Act (LSA), all employment contracts are to be preserved by the employer for at least 3 years. Employers are required to issue the certificate of employment to the employee immediately upon the employee's request.
Working Hours
The standard working hours in Taiwan are 40 per week and 8 hours per day. The maximum allowed working hours per week are 48. Daily working hours cannot exceed 12.
Probation Period and Notice Period
The standard notice period in an indefinite contract is three months. In Taiwan, the notice period varies based on the length of employment.
| Continuous Employment Duration | Notice in Advance |
|---|---|
| 3 ~ 12 months | 10 days |
| 1 ~ 3 years | 20 days |
| More than 3 years | 30 days |
Termination And Severance Pay
Terminated employees in Taiwan are entitled to severance payment. Severance pay is calculated based on the employee's joining date. Employees joined before 1st July 2005 get severance pay as per LPA (Labor Pension Act) and the employees joined after 1st July 2005 get severance pay as per LSA (Labor Standard Act) or LPA as per their choice.
Severance pay under the Labor Standards Act (LSA) corresponds to one month's average salary per year of employment. In contrast, severance pay under the Labor Pension Act (LPA) is calculated at half a month's average salary per year of employment, with a maximum limit of six months' wages.
Payroll in Taiwan
Minimum Wages
The monthly minimum wage in Taiwan is 26,400 NT (Taiwan New Dollar). Starting 2024, the minimum wages will be revised to 27,470 NT.
Payroll Cycle
In Taiwan, payroll is usually processed monthly, and the salaries are paid in local currency Taiwan Dollars on the 15th of each month.
Overtime Pay
Overtime pay in Taiwan is calculated based on the number of additional working hours per day.
- If the additional working hours per day are more than 2, the overtime pay is equal to one-third of the standard pay.
- If the additional working hours per day are less than 2, the overtime pay is equal to two-thirds of the standard pay.
It is important to include all components of the salary while calculating the hourly wages and overtime pay. The standard gross salary includes basic pay, food allowance, and attendance bonus. Some employers consider only basic salary while calculating hourly wage and overtime; however, MOI made it mandatory to include food allowance and attendance to calculate overtime pay.
Social Security in Taiwan
Social Security Contributions
Labor Insurance Program (LIP)
The Labor Insurance Program (LI) is the main social insurance program in Taiwan. It covers all employees, including foreign nationals, who are working for a Taiwanese employer. The LI premium rate is 11% of the employee's monthly salary, up to a monthly maximum of TWD45,800. The employee pays 20% of the premium, and the employer pays the remaining 80%.
National Health Insurance Program (NHIP)
The National Health Insurance (NHI) program covers all residents of Taiwan, including foreign nationals. The NHI premium rate is 5.17% of gross salary, where employers are liable for 60% of the premium (0.3102%), and 1.58% of the national average number of dependents, employees are liable for 30% of the premium (0.155%), and the government is liable for the remaining 10% (0.052%).
National Pension Insurance (NPI)
The National Pension Insurance (NPI) program is a voluntary retirement savings program. Employees and self-employed persons can make contributions to the NPI to receive a pension upon retirement. The NPI contribution rate is 6% of the employee's or self-employed person's monthly income, up to a monthly maximum of TWD45,800.
Government Employee Insurance (GEI)
The Government Employee Insurance (GEI) program covers all government employees. The GEI premium rate is 16% of the employee's monthly salary, up to a monthly maximum of TWD45,800. The employee pays 8% of the premium, and the government pays the remaining 8%.
Self-Employed Labor Insurance (SELI)
The Self-Employed Labor Insurance (SELI) program covers self-employed persons who are not covered by the LI program. The SELI premium rate is 10.5% of the self-employed person's monthly income, up to a monthly maximum of TWD45,800.
Unemployment Insurance (UI)
The Unemployment Insurance (UI) program provides benefits to unemployed workers who have been laid off through no fault of their own. The UI premium rate is 1% of the employee's monthly salary, up to a monthly maximum of TWD45,800. The employee pays 0.2% of the premium, and the employer pays the remaining 0.8%.
In addition to the above social security contributions, employers in Taiwan are also required to pay the following:
- Supplementary premium: An additional 2.11% on the difference between total monthly taxable salaries and employees' monthly total insured salaries.
- Business tax: All sales of goods and services in Taiwan, as well as the importation of goods into Taiwan, are subject to business tax.
Social Security Programs in Taiwan
| Program | Coverage | Premium Rate | Employee Share | Employer Share |
|---|---|---|---|---|
| Labor Insurance (LI) | All employees, including foreign nationals | 11% of monthly salary, up to TWD 45,800 | 20% | 80% |
| National Health Insurance (NHI) | All residents, including foreign nationals | 5.17% of gross salary | Employee: 30%, Government: 10% | 60% |
| National Pension Insurance (NPI) | Voluntary retirement savings | 6% of monthly income, up to TWD 45,800 | --- | --- |
| Government Employee Insurance (GEI) | Government employees | 16% of monthly salary, up to TWD 45,800 | 8% | 8% |
| Self-Employed Labor Insurance (SELI) | Self-employed persons not covered by LI | 10.5% of monthly income, up to TWD 45,800 | --- | --- |
| Unemployment Insurance (UI) | Provides benefits to unemployed workers | 1% of monthly salary, up to TWD 45,800 | 0.2% | 0.8% |
Personal Income Tax in Taiwan
For non-resident aliens in Taiwan:
- Stay less than 90 days: 18% withholding tax on salary from a Taiwan entity; exempt for income from foreign entities.
- Stay more than 90 days but less than 183 days: 18% flat tax on Taiwan taxable salary income.
For resident aliens in Taiwan (2022 rates):
| Income Range (TWD) | Tax Rate (%) | Less Progressive Difference (TWD) | |
|---|---|---|---|
| 0 | 560,000 | 5 | 0 |
| 560,001 | 1,260,000 | 12 | 39,200 |
| 1,260,001 | 2,520,000 | 20 | 140,000 |
| 2,520,001 | 4,720,000 | 30 | 392,000 |
| Above 4,720,000 | 40 | 864,000 |
Plus, Income Basic Tax (IBT) at a flat 20% rate for tax residents with foreign income over TWD 1 million and basic income exceeding TWD 6.7 million. IBT is calculated separately and can be credited with foreign taxes paid, subject to limitations.
Selecting an Employer of Record (EOR) in Taiwan emerges as a pivotal decision for companies venturing into the intricacies of global expansion. Delegating responsibilities such as compliance with local employment regulations, intricate payroll management, and legal matters to the EOR enables businesses to seamlessly establish their presence in Taiwan without the complexities of setting up a legal entity. This collaborative partnership empowers companies to focus on their core objectives and growth strategies, ensuring that their workforce in Taiwan operates in strict compliance with local laws. The EOR not only simplifies international employment procedures but also provides expert guidance in navigating Taiwan's nuanced employment landscape. In the dynamic and diverse market of Taiwan, an EOR proves to be an invaluable ally, streamlining operations and creating an environment conducive to sustained business growth.