萬國法律事務所

Taiwan’s Executive Yuan has recently approved a revision of the Income Tax Law in order to make voluntary payments made by laborers of as much as six (6%) percent of their monthly salary into individual retirement accounts or annuity insurance accounts exempt from income tax. It is hoped that he revision will facilitate further development of the annuity insurance market in Taiwan by insurance companies as per the new retirement fund system.

The primary goal of the new revision is to make harmonize the new annuity insurance system and the individual retirement account system. According to the revised provisions of Taiwan’s Income Tax Law at paragraph 1 of Article 14, voluntary payments into annuity insurance policies will be treated the same as payments deposited into individual retirement accounts and as such, will not be deemed as annual taxable income.

The total amount of tax-exempt payments made under both systems shall be limited to no more than 6% of salary. Subsequent retirement, a worker’s annuity insurance payments will be counted as retirement income. In order to encourage profit-seeking enterprises in Taiwan to allocate retirement fund or annuity insurance premiums, as much as fifteen (15%) percent of the total annual salary payments of such allocations may be listed as expenses.

Under Taiwan’s current Income Tax Law, laborers are permitted to deposit funds into individual retirement accounts or annuity insurance. Such funds, when deposited into individual retirement accounts, can be deducted from the total annual taxable income in sums of as much as 6% of monthly salary. However, whenever funds are deposited into annuity insurance, these are included in the maximum amount of NT$ 24,000 in insurance premiums that are deemed appropriate for itemized deduction.

After Taiwan’s Legislative Yuan passes this revision, the annuity insurance premiums will be included in the amount that exempted from annual taxable income. The revision will be implemented retroactively to July 1, 2005.