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Taiwan boasts the 11th most economically free environment worldwide, as per the 2020 Index of Economic Freedom because of its streamlined foreign investment process. Additionally, the World Bank ranks Taiwan 15th globally for ease of doing business, facilitating the smooth establishment of international companies in the country.
Over the past five years, Taiwan has experienced consistent GDP growth and earned commendable scores for macroeconomic stability in the recent Global Competitiveness Report by the World Economic Forum (WEF). The WEF ranks Taiwan as the 12th most competitive economy on a global scale.
Renowned for its innovation, Taiwan showcases an impressive tech-savvy workforce. The country secures the 3rd position in patent applications and the 5th spot in global rankings for research and development.
Taiwan incorporates its culture into employment practices. Employers commonly reward their employees with cash bonuses ranging from 800 TWD to 2,000 TWD during three major holiday festivals: the Mid-Autumn Festival, the Dragon Boat Festival, and the Lunar New Year.
In Taiwan, two contract types are utilised: fixed term for temporary or short-term positions, and indefinite term for both part-time and full-time roles. These employment contracts do not need to be in formal writing for legal validity, but it is recommended to indicate the following basic employment terms:
While probationary periods are a common practice in Taiwan, they are not explicitly mentioned in the country's Labour Standards Act (LSA). Employers are obligated to adhere to the general LSA standards concerning termination and severance during probationary periods. Typically, for permanent definite employment, the probationary period lasts for about three months.
In Taiwan, standard working hours amount to 8 hours per day or 40 hours per week, with a maximum of 12 hours per day, including overtime. Every seven working days necessitate two days off, with one being obligatory and the other offering flexibility for work, compensated as overtime if utilised. The total weekly working hours must not surpass 48 hours.
Overtime work, as outlined in employment contracts or collective agreements, is compensated according to specified rates. Employees can work up to 12 hours daily, including overtime, with a monthly limit of 46 overtime hours. The initial 2 hours of overtime receive a rate of 134% of the regular salary, while the subsequent 2 hours are compensated at a rate of 167%.
The Labour Standards Act mainly governs the labour rights in Taiwan, which sets the rules for basic wage, working hours, weekends, holidays, and other key employment conditions in the country.
Though not obligatory, employees in Taiwan often receive a 13-month and 14th month salary, which is typically paid before Chinese New Year. Additionally, festival bonuses are often given before the Dragon Boat Festival and Mid-Autumn Festival.
In Taiwan, individual tax rates are progressive, and tax residents are also subject to a flat-rate Income Basic Tax (IBT) of 20%, applicable to both locals and expats staying in Taiwan for 183 days or more in the tax year.
A Taiwanese company contributes 6% of Taiwanese employees' earnings and 2-15% for non-Taiwanese employees to pension funds. Employees can voluntarily contribute 5.1% to National Pension Programs. Labour insurance premiums at 10.5% cover disability, old-age, and survivor annuities, with employees contributing 6% of monthly earnings to a mandatory individual account.
The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Taiwan tailored to your needs.
Terminating employment should comply with the Labour Standards Act. Mutual termination agreements, subject to case-specific terms, may also be utilised. Both parties must give prior notice, provide payments in lieu, and settle any remaining holidays, payments, or benefits upon termination.
The notice periods in Taiwan extend based on the following length of employment:
Severance pay in Taiwan - required for redundancy or poor performance termination - is typically 50% of the average monthly pay per year, up to a maximum of 6 months' pay. For those under the LSA pension system, including foreigners and local employees, it amounts to one month's average pay per year of employment.
Full-time employees in Taiwan are paid for public holidays, which can be either fixed or based on the lunar calendar. Employers and employees can negotiate adjustments, and Taiwan observes various national and public sector holidays, including:
Legal and compliance experts are readily available to provide guidance and case-by-case Q&A support.
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