Taiwan payroll and benefits guide

What global businesses need to know about payroll in Taiwan

As late as the mid-1970s, Taiwan was a poor, largely agricultural country that was still receiving financial aid from the United States. Now, just half a century later, it’s a major economic force, one of the world’s biggest manufacturers of electronics and microchips, and the 22nd biggest economy by GDP in the world.

More than a third of Taiwan’s economy is heavy industry, and the majority of its exports go to either China or the United States. This has helped make it a major player, both in Asia and globally, and it’s therefore no surprise that foreign enterprises are keen to take advantage of its strong trade links.

From an employment and payroll perspective, there have been several key changes in recent years, while cultural considerations remain very important, too. This guide to the basics of running payroll in Taiwan can keep you up to date.

Getting Started

Taiwan has a short list of industries and sectors in which foreign companies are not permitted to operate, such as agriculture and broadcasting. There are also some industries where you may have to gain official approval to operate, such as gas, electricity, making medical goods, and some financial services. It’s essential to check the latest list, issued by the Ministry of Economic Affairs (MOEA) Investment Commission, before you start with any Taiwanese expansion plans.

Most foreign businesses setting up in Taiwan do so as either a limited company or a corporation, which involves:

Applying for foreign investment approval
Examination of investment capital by the Investment Commission
Company registration
Importer/exporter registration (if required – an English trading name will be needed for this)
Business registration with local tax authorities, and with the Bureau of Labor Insurance for social security and pension contributions

There is no specific minimum amount for startup capital. However, foreign investors will have to apply for visas and work permits at an individual level, and the eligibility for visas is determined by the level of initial investment. For example, an initial investment of US$200,000 enables visa applications for two people, with a potential for five more applications for each further US$500,000 committed.

Employment Considerations

The Employment Services Act provides rights to Taiwan employees, including a wide range of nondiscrimination clauses. Termination rights and other employment laws are covered under Taiwan‘s Labor Standards Act (LSA) by the Ministry of Labor. Foreign nationals are required to have a written contract with employers, and must also obtain a work permit and a visa, and apply to the National Immigration Agency for an Alien Resident Certificate (ARC) which is valid for between one and three years.

Taiwan introduced new legislation in 2025, designed to protect the rights and employability of older workers. The official retirement age remains 65, but employers and employees can mutually agree to postpone this if both parties are happy to continue. Employers have also been banned from paying older workers less or providing them with substandard working conditions compared to younger coworkers, with penalties of up to TWD$1.5 million (approx. £37,100; $50,000; €43,100).

Taiwanese legislation limits working time for employees to a maximum of 40 hours per week and eight hours on any given day. Weekly working hours can be varied as long as the eight-week average stays below those limits.

Overtime can be worked as long as total working hours don’t exceed 12 hours in a day, and as long as no more than 46 hours of overtime are worked per month. The four extra hours worked on a working day are paid at 1.34 times the hourly rate for each of the first two hours, and 1.67 times the hourly rate for the last two.

There is also a mandatory requirement for employees in Taiwan to get two days off each week, one of which can be worked as overtime if mutually agreed. The overtime rates for this ‘flexible’ day are 1.34 times the hourly rate for the first two hours, 1.67 times for the next six hours, and 2.67 times for the last four hours up to the 12-hour limit.

Probation periods in Taiwan are normally three months for any time of permanent employment, although there are no fixed legal requirements around the length. Notice periods for terminations vary depending on the length of service, starting at ten days for those with at least three months’ service, rising to 20 days at one year of service and to 30 days after three years.

Compensation, Bonuses and Severance in Taiwan

Workers in Taiwan are paid monthly (usually on or around the 15^th of each month). The national minimum wage in Taiwan has risen steadily in recent years and is applied to both monthly and hourly wages. As of the latest rise on January 1 2025, the monthly rate is TWD$28,590 (approx. £710; $950; €820) and the hourly rate is TWD$190 (approx. £4.70; $6.30; €5.45).

The payment of a 13^th-month is common in Taiwan. Although it is not strictly a legal requirement, many employees will expect it to be offered. This is typically paid in the run up to the Lunar New Year, while a 14^th-month bonus is also sometimes paid in time for the Dragon Boat Festival in May or the Mid-Autumn Festival in October.

Although not required, some employers provide meal allowances and health insurance benefits to their employees, as well as offering housing allowances to expat workers to encourage them to make the move.

Severance pay is half a month’s salary for each year of service up to a maximum of six months for 12 years of service or more.

Tax and Social Security

Income tax is withheld at source by employers, and is levied in Taiwan across five progressive bands, starting at 5% for the first TWD$590,000 (approx. £14,600; $19,700; €16,900) of annual earnings, and reaching the top band of 40% for all earnings over TWD$4,980,000 (approx. £123,000; $166,000; €143,000) per year.

Nonresidents working in Taiwan are generally taxed at a flat rate of 18%. If they are in Taiwan for more than six months in a calendar year, the normal resident tax rates apply.

The corporate tax rate is 20% for all earnings over TWD$120,000 per year (approx. £3,000; $4,000; €3,450). The standard rate of VAT in Taiwan is 5%.

Social security contribution rates in Taiwan have been revised in recent years, and are currently as follows:

Labor insurance: 8.05% employer, 2.5% employee
Employment insurance: 0.7% employer, 0.2% employee
Pension fund: 6% employer
Health insurance: 4.84% employer, 1.55% employee
Supplementary health insurance premium: 2.11% employer
Workers’ compensation fund: 0.13% employer

Holidays and Leave

Paid leave entitlement increases based on time served, starting at three days covering the second half of their first year. Entitlement per annum increases to seven, ten and 14 after each of the first three years of service, then to 15 days at five years. Once an employee has ten years of service, they receive one additional day each year up to a maximum of 30. Employees must be paid in lieu for any leave that is unused.

Taiwan has added four new public holidays as of 2025, which means there are now approximately 16 days of public holidays each year. Several of these cover Lunar New Year, which is usually in late January or early February. Employees should be paid for these days off, and should receive time off in lieu if they’re required to work them.

Paid sick leave entitlement is up to 30 days a year when employees are not hospitalized, increasing to 12 months if they’re in hospital. Sick pay is 50% of salary: some of this may be covered by insurance payments, but employers must make up any shortfall below the 50% level.

Maternity leave entitlement is eight weeks at full pay (50% of pay for those with less than six months’ service). Workers who are pregnant can request to be moved to lighter duties, while those who are breastfeeding are entitled to additional break periods. Fathers are entitled to seven days of paternity leave at their full regular pay rate. Parents can also apply for parental leave of a maximum of two years within the first three years after the child’s birth; they receive 60% of their insured salary, paid for by labor insurance.

Bereavement leave is eight days if an immediate family member dies, while reduced rates of six and three days apply for the loss of more distant family members. Employees should also get paid leave if required for National Service, and eight days paid leave if they’re getting married.

Payroll in Taiwan: A summary

Specifics like the 13^th-month bonus underline the need to understand workplace culture in places like Taiwan. Getting payroll right in the country is about more than compliance with regulations – you’ll need to understand the expectations of the workforce, too.

The best way to gain that understanding, and start your Taiwanese expansion project on the front foot, is to access in-country payroll expertise. Indeed, a global network of payroll experts can help you perfect your payroll not only in Taiwan, but in all the countries your organization operates in.

This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional. Click here to see more country payroll guides from CloudPay.