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Guide to Payroll in Taiwan

September 15, 2025 by digitalgowhere

September 15, 2025

Guide to Payroll in Taiwan

For international companies operating in Taiwan, payroll is a critical intersection of compliance, culture, and employee trust. It goes far beyond salary processing, requiring strict adherence to labour laws, precise tax reporting, and timely social security contributions. Effective payroll management not only fulfils regulatory obligations but also strengthens organisational credibility and workforce engagement.

Taiwan’s strong economy, highly educated talent pool, and strategic position in Asia make it an appealing hub for expansion. Yet, navigating its payroll framework without local expertise risks compliance breaches, unexpected costs, and diminished employee morale. This guide examines the strategic role of payroll in Taiwan , highlighting key compliance requirements, wage benchmarks, remote work considerations, and how to select the right payroll partner for a scalable, legally sound framework.

Table Of Content

How Does Taiwan Payroll Strengthen Global Competitiveness?

Taiwan has evolved far beyond its reputation as a manufacturing powerhouse. Over the past decade, it has transformed into an innovation-driven economy with thriving technology, financial services, healthcare, and creative sectors. For businesses entering or expanding in Taiwan, managing payroll involves tasks that extend beyond administrative responsibilities. It plays a crucial role in keeping employees happy, staying compliant with the law, and supporting business growth.

When payroll is done well, it can give companies a competitive edge—making it easier to attract top talent, comply with regulations smoothly, and expand operations with confidence. Here’s why it matters:

1. Attracting and Retaining Top Talent

Professionals in Taiwan’s competitive industries, such as advanced engineering, R&D, and semiconductor manufacturing, demand more than just attractive compensation; they place a premium on timely, accurate, and consistent salary payments.
Efficient payroll systems demonstrate to employees that the company values their contributions and upholds high professional standards.
Prompt, error-free salary disbursements foster trust, improve morale, and help reduce employee turnover.
Transparent communication of pay and benefits—through clear payslips or user-friendly employee portals—enhances the employer brand.
This clarity can be a deciding factor when top candidates are evaluating multiple job offers.

2. Ensuring Full Compliance

Taxation, insurance, and pension contributions are all covered by Taiwan’s comprehensive and rigorously enforced labour laws.

Payroll administrators must:

Calculate, withhold, and remit personal income tax accurately each month.
Correctly contribute to labour insurance, health insurance, and pension funds.
Meet all statutory payment and filing deadlines.

Non-compliance risks financial penalties, back payments, and reputational harm, which can hinder recruitment and partnerships.

A robust and compliant payroll process demonstrates operational integrity—particularly vital in regulated sectors such as fintech and pharmaceuticals.

3. Enabling Rapid Market Scaling

Taiwan’s fast-moving market presents sudden opportunities—such as branch expansions, product launches, or seasonal demand spikes.

A flexible payroll framework enables companies to:

Onboard new employees quickly without overwhelming HR teams.
Adapt to shifting workforce needs, from permanent staff to contractors and remote workers.
Manage payroll efficiently across multiple locations within Taiwan.

What Are the Key Trends and Compliance Rules for the Remote Workforce in Taiwan?

Selecting the right payroll services in Taiwan can significantly strengthen business operations. Beyond saving time and minimising administrative errors, the right provider ensures compliance with evolving local regulations and delivers insights that reflect the realities of doing business in Taiwan. The most effective partners go beyond number-crunching to provide strategic value.

Here are some essential things to keep in mind when you’re looking for payroll partners:

Local Expertise

In-depth understanding of Taiwan’s complex and evolving labour and tax laws ensures compliance and avoids penalties.

Scalability

A partner that can adapt services as your workforce grows, maintains continuity and efficiency.

Technology Integration

Automation and seamless integration with HR/accounting systems reduce errors and streamline operations.

Multilingual & Regional Support

Providers with multilingual capabilities and regional experience help manage cross-border payroll and cultural nuances.

What Is the Average Salary in Taiwan?

Organisations seeking to recruit and retain quality employees in the competitive contemporary market need to understand the compensation scenario in Taiwan, including the average salary in Taiwan. It assists both employees and job seekers in forming realistic expectations about compensation, thereby fostering transparency and trust.

According to National Statistics, the Republic of China (Taiwan), official labour market data provides a credible benchmark for assessing current salary trends across industries, as shown in the following table.

Category	Amount (NTD)	Equivalent (USD)
Average Regular Earnings	NT$47,796	~$1,440
Average Total Earnings	NT$113,846	~$3,400
Median Monthly Salary	NT$113,846	~$1,140

These figures represent the overall earnings across industry and service sectors, including base salary, bonuses, and overtime pay.

Key Takeaways for Employers and Employees

Salary Range:

The gap between median and average salaries shows variation in earnings, highlighting the need for competitive pay structures.

Total Rewards Matter:

Bonuses and overtime significantly enhance overall income, making total compensation a vital factor in attracting and retaining talent.

Market Awareness:

Salary benchmarks help employees set realistic expectations and negotiate effectively.

Sector Variations:

Earnings differ by industry, with tech and finance generally offering higher pay than manufacturing or services.

Strategic Alignment:

For multinationals, matching local salary trends is essential for cost control and talent acquisition.

Compliance:

Following local salary standards ensures legal compliance and promotes fair employment practices.

What Is Minimum Wage in Taiwan, and What Does It Mean for Employers?

The minimum wage in Taiwan is regularly reviewed and adjusted by the government to reflect economic growth and shifts in the cost of living. These adjustments aim to provide fair compensation for workers while supporting sustainable business operations. Effective January 1, 2025, the minimum wage rates have been updated as follows:

Wage Type	Amount (NTD)	Equivalent (USD)
Monthly Minimum	NT$28,590	~$870
Hourly Minimum	NT$190	~$5.77

What Employers Should Keep in Mind

The upcoming changes to Taiwan’s minimum wage in 2025 have real implications for employers:

Staying Compliant

Updating payroll systems to reflect the new rates isn’t just a legal requirement—it shows employees and stakeholders that the company operates with integrity.

Managing Labour Costs

An increase in base wages can affect overall payroll expenses. Employers should revisit their budgets to ensure they can absorb the changes without putting pressure on other areas of the business.

Supporting Retention and Hiring

Fair, competitive pay isn’t just about meeting regulations—it’s a signal to current and future employees that they’re valued. That matters when building a loyal, motivated team.

Getting Payroll Right

Mistakes in wage calculations, especially with overtime or benefits, can quickly erode trust. Accuracy helps maintain confidence and smooth operations.

Planning Ahead

Understanding how wage changes impact the broader workforce enables leaders to make more informed, forward-looking decisions about compensation and hiring.

By proactively addressing these factors, employers can navigate minimum wage changes smoothly while supporting their business goals and employee well-being.

Basics of Employment Contracts in Taiwan

An employment contract in Taiwan is more than just a formality—it’s the foundation of a clear, legally compliant relationship between the employer and employee. Under Taiwanese labour laws, a written contract is strongly recommended for all employment arrangements, whether the role is full-time, part-time, or project-based.

A well-structured contract ensures that both parties understand their rights, responsibilities, and entitlements from the outset. For companies expanding or hiring in Taiwan, especially those engaging talent through cross-border arrangements, this clarity is critical in avoiding disputes, meeting compliance obligations, and building trust with local hires.

Key elements typically included in a Taiwan employment contract:

Job Title and Scope of Work – A precise description of the role and responsibilities, avoiding ambiguity.
Compensation and Benefits – Salary amount, payment schedule, bonuses, allowances, and any in-kind benefits.
Working Hours and Rest Days – Alignment with Taiwan’s Labour Standards Act, including overtime rules and public holidays.
Leave Entitlements – Annual leave, sick leave, parental leave, and other statutory entitlements.
Probation Period – Duration and conditions for confirmation of employment.
Termination and Notice Period – Legal grounds for ending the contract and the required notice for each party.
Confidentiality and Non-Compete Clauses – Protection of sensitive business information, especially for foreign-invested companies entering the Taiwan market.

Why it matters:
A well-drafted, compliant contract creates clarity, protects both parties, and supports long-term working relationships. It’s also an essential step in meeting Taiwan’s labour law requirements while maintaining a positive workplace culture.

How Payroll in Taiwan Works: Taxes, Social Security, and Processes

Payroll Element	What It Is	How It Works in Taiwan	Why It’s Important
Income Tax	Tax on what employees earn	Based on a progressive rate (5%–40%) depending on annual income. Employers deduct it from salaries each month and send it to the tax office.	Keeps the business compliant and avoids last-minute tax issues.
Labor Insurance	Safety net for workers	Covers workplace injuries, maternity, disability, and death benefits. The employer, employee, and government share contributions.	Helps employees stay protected during unexpected situations.
Employment Insurance	Support during unemployment	Provides temporary income and job search assistance to employees who lose their jobs.	Gives financial stability while finding new work.
National Health Insurance	Taiwan’s public healthcare system	All employees must be enrolled. Costs are split among the employer, the employee, and the government.	Ensures affordable medical care when needed.
Labor Pension	Retirement savings plan	Employers contribute at least 6% of an employee’s monthly salary into a personal pension account.	Builds a secure income for retirement.
Payroll Cycle	When salaries are paid	Usually, by the end of the month, this includes wages, overtime, and allowances.	Maintains consistent and predictable pay for employees.
Payslips	Salary breakdown	Must clearly show wages, deductions, contributions, and taxes.	Creates transparency and avoids confusion.
Year-End Bonus	Extra pay during Lunar New Year	Many employers give a bonus equal to around one month’s salary.	Motivates staff and matches local workplace traditions.

Key Considerations When Choosing a Payroll Partner in Taiwan

Finding the right payroll partner in Taiwan isn’t just about getting payslips out on time; it’s about ensuring accurate and timely payroll processing. It’s about having someone who understands the rules, protects your data, and keeps things running smoothly so your team gets paid correctly and on schedule—without the headaches.

What to Check	What It Means in Practice	Why It Helps
✔ Knows Local Laws	Understands Taiwan’s tax rules, labour insurance, and health insurance — and stays updated when laws change.	Keeps payroll compliant and avoids costly mistakes.
✔ Gets It Right, Every Time	Processes salaries accurately and pays on time.	Builds trust with employees and maintains high morale.
✔ Keeps Data Safe	Uses secure systems and maintains strict confidentiality.	Protects sensitive salary and personal information.
✔ Works Well with HR	Can connect payroll to hiring, onboarding, and benefits systems.	Reduces administrative work and eliminates duplicate data entry.
✔ Grows with You	Can handle payroll, whether you’re adding five people or fifty.	Makes scaling up (or down) hassle-free.
✔ Clear on Costs	Offers straightforward, transparent pricing with no surprises.	Helps with budgeting and cost planning.
✔ Understands the Local Culture	Speaks the language, knows local customs, and can provide quick support.	Makes communication smoother and problem-solving faster.

Conclusion: Building a Scalable and Compliant Payroll Strategy in Taiwan

A well-managed Payroll in Taiwan is the foundation for business success. From setting competitive salaries based on the average salary in Taiwan to ensuring compliance with the minimum wage in Taiwan, from drafting airtight employment contracts to managing a geographically dispersed remote workforce, every detail matters.

Partnering with an expert like Galaxy Group gives businesses peace of mind. With our tailored payroll services in Taiwan, we handle compliance, efficiency, and scalability, allowing you to focus on growth.

Starting in Taiwan or growing an existing business here means investing in a payroll strategy that is flexible and compliant, something that helps protect the company, keeps employees happy, and sets the stage for lasting success.

Stay Compliant with Taiwan’s Payroll Regulations

Engage trusted experts to handle payroll, wage updates, and compliance in Taiwan and ensure seamless operations in 2025.

FAQ’S

What is the minimum wage in Taiwan?

The monthly minimum wage in Taiwan is NT$27,470, with an hourly rate of NT$183, as of 2025.

What is the average salary in Taiwan?

On average, salaries in Taiwan range from NT$40,000 to NT$60,000 per month, depending on the industry and experience level.

Are written employment contracts mandatory in Taiwan?

Yes. Employers must provide a written contract detailing job terms, wages, and benefits to ensure compliance and clarity.

How often is payroll processed in Taiwan?

Most companies pay salaries monthly, but pay frequency can vary based on the employment contract.

Can foreign companies hire remote workers in Taiwan?

Yes. Businesses can hire remote talent in Taiwan, but must comply with local labour laws, payroll, and tax regulations.

Managing Payroll in Japan

August 30, 2025 by galaxy

August 30, 2025

Managing Payroll in Japan

Japan’s employment landscape is shifting, driven by labour law changes, an ageing workforce, and rising demand for specialised talent. Payroll here is more than salary processing—it’s a legally regulated system tied to taxes, social insurance, and mandatory bonuses, influenced by factors like residency, role, and working hours.

As workforce dynamics evolve, payroll has become a strategic function requiring legal compliance, cultural awareness, and employee focus. This blog outlines Japan’s payroll framework, key compliance rules, and practical guidance for managing it effectively.

Table Of Content

What Are the Key Components and Legal Requirements of Japan Payroll?

Running payroll in Japan requires precision and strict adherence to regulatory requirements. From accurate tax deductions to meeting tight payment deadlines, every process must comply fully with the law. Beyond fulfilling statutory obligations, effective payroll management demonstrates a company’s commitment to transparency, reliability, and respect for its employees.

Key Components of Payroll in Japan :

1. Basic Salary and Allowances

The employee’s base pay, which is specified in the employment contract and paid regularly, is the main component of every payroll. Furthermore, many businesses provide additional funds for expenses such as housing, transportation, or supporting dependents. These extras are a common way to help employees beyond the necessities, though they can vary depending on the company, industry, and role of the employee.

2. Working Hours and Overtime Pay

Japan has strict guidelines around working hours. A typical workweek is capped at 40 hours, with no more than 8 hours a day. If employees clock in extra hours, they must be compensated—usually at 25% above their usual rate. This rate goes up even further for late-night work or public holiday shifts, reflecting the value placed on work-life balance and fair pay.

3. Bonuses

Bonuses are a big part of Japanese corporate life. While not legally required, it’s customary for companies to pay them twice a year—often in the summer and winter. These payouts can equal one or two months of salary and are seen as a way to reward loyalty and performance.

4. Deductions and Contributions

Every month, employers need to set aside specific amounts from their employees’ salaries. This includes income tax, resident tax, and contributions to Japan’s social insurance programs. These programs help cover health insurance, pension, unemployment benefits, and long-term care. They offer essential support and peace of mind for employees and their families.

5. Payslips and Payroll Reports

Payslips are standard practice in Japan. They give employees a transparent look at how their salary breaks down—what’s been added, what’s been deducted, and what they’re taking home. Behind the scenes, companies must also keep detailed payroll records to stay on top of taxes and social contributions.

Legal Responsibilities Every Employer Must Fulfil

1. Enrolling Employees in Social Insurance

Employers must enrol full-time employees in Japan’s national social insurance program. This ensures that workers can access necessary benefits. The Japan Pension Service and relevant health insurance organisations oversee this program.

2. Handling Withholding Tax

In addition to paying salaries, employers must use official tax tables to determine and withhold the appropriate amount of income tax. By doing this, taxes are paid accurately all year long, preventing unpleasant surprises.

3. Staying Compliant with Labour Laws

From drawing up employment contracts to paying wages on time and respecting working hour rules, businesses must follow the Labour Standards Act. Failing to do so can result in penalties—and damage a company’s reputation with both authorities and employees.

4. Making Year-End Tax Adjustments (Nenmatsu Chosei)

Companies are expected to make a final tax adjustment for every employee at the end of the year. This guarantees that all taxes paid during the year, including any deductions for dependents or insurance, reflect the employee’s actual circumstances. It’s essential to end the payroll year on a positive note.

Choosing the Right Payroll Company in Japan: Local, Global or Regional

Criteria	Local Providers	Regional Providers	Global Providers
Regulatory Expertise	Deep understanding of Japan’s payroll laws, labour codes, and social security norms.	Covers Japan along with broader Asia-Pacific regulations.	Offers compliance at a global level, with coverage of Japanese rules as part of the package.
Language & Local Support	Operates in Japanese, with local teams familiar with cultural and business nuances.	Often, bilingual support teams are familiar with regional expectations.	Centralised, multilingual service—may not always provide native-language assistance.
Technology Platforms	May rely on traditional systems or offer basic digital tools.	Provides mid-level automation and limited integrations.	Uses advanced platforms with automation, analytics, and integrations at scale.
Scalability	Tailored for businesses operating solely in Japan.	Suitable for companies expanding across the Asia-Pacific.	Built for global teams and multi-country payroll management.
Cost Structure	Generally, it is more cost-effective for domestic operations.	Balanced pricing with value-added regional features.	Premium-priced, with broad functionality and enterprise-grade support.
Cultural Fit	High alignment with Japanese work culture and local employee expectations.	Understands a mix of regional cultures and workplace norms.	Standardised service model, which may overlook country-specific nuances.
Best Fit For	Domestic companies with no plans for regional expansion.	Businesses are growing across multiple Asian markets.	Enterprises managing global workforces and international payroll compliance.

Japan Employment Laws That Impact Payroll Operations

Comprehending the legal framework is essential for processing payroll accurately in Japan. Payroll system implementation and management are influenced by a number of crucial labour laws that regulate compensation, deductions, and employee protections.

Labour Standards Act (LSA)

This is the bedrock of all payroll regulations in Japan. It sets the rules every employer must follow when it comes to wages and working hours.

1. Wages must be paid at least once a month, in full, and directly to the employee.

2. Standard working hours are capped at 40 hours per week (or 8 hours per day).

3. Overtime must be compensated with additional pay—higher rates apply for late-night work, weekends, or public holidays.

4. The Act also outlines termination procedures, mandatory rest days, and rules on work breaks.

Minimum Wage Law

Minimum wages aren’t uniform in Japan—they vary by prefecture and are updated annually.

1. Each region sets its minimum hourly wage, and employers must stay updated on the latest rates.

2. Payroll must reflect the local rate based on where the employee works, not where the company’s head office is located.

3. Businesses with multiple locations need to monitor and update wage compliance regularly to avoid penalties.

Social Insurance Laws

Social insurance is non-negotiable in Japan—and it plays a key role in payroll.

1. Employers are legally required to register eligible employees under four main insurance programs:

Health Insurance
Employee Pension Insurance
Unemployment Insurance
Workers’ Compensation Insurance

2. Contributions are shared between the employer and the employee.

3. Deductions must be accurately calculated and withheld every month.

4. Rates vary depending on age, salary, and insurance type, so payroll must be precise and updated.

Income Tax Withholding

Japan follows a Pay-As-You-Earn (PAYE) system, which puts the onus on employers to manage monthly tax deductions.

1. Employers are expected to withhold income tax from salaries every month—it’s a regular part of payroll in Japan.

2. The amount deducted depends on several factors, including the employee’s income, the number of dependents, and their residency status.

3. At the end of the year, there’s a process called nenmatsu chosei, which helps balance out any overpaid or underpaid taxes.

4. Getting tax calculations wrong can create compliance problems, so it’s essential to be precise and double-check everything.

Equal Pay for Equal Work

Recent legal reforms are pushing companies toward fairer pay structures.

1. Non-regular employees—like part-timers, contract workers, or dispatch staff—must be compensated fairly based on the job they do, not their employment status.

2. This includes salaries, bonuses, and benefits.

3. As a result, companies often need to restructure their payroll systems and review internal policies to ensure compliance.

Working Hours and Overtime Regulations

Time tracking isn’t just a good habit—it’s something every employer in Japan is legally required to do.

1. The law limits working hours to 8 hours a day and 40 hours a week.

2. If employees work beyond that, overtime pay kicks in:

125% of their regular rate for standard overtime
135–150% for late-night shifts or work on holidays

To stay compliant, companies need a proper time-tracking system that records working hours accurately and matches up with labour regulations.

Paid Leave Entitlements

Paid leave is a statutory right, and it directly affects payroll records and planning.

1. Employees earn paid leave after six months of continuous employment.

2. The number of leave days increases with years of service.

3. Employers are responsible for:

Tracking leave accruals
Ensuring employees take the leave
Reflecting paid leave accurately in payroll calculations

Termination and Severance Guidelines

When employment ends, employers have a legal and financial responsibility to settle dues properly.

1. Severance isn’t mandated by law, but many companies offer it as part of company policy or contracts.

2. Final payroll must include:

All outstanding wages
Payment for unused paid leave
Any applicable deductions

3. Proper documentation and notice periods must be followed to ensure lawful termination.

Minimum Wage and Average Salary Trends in Japan

Japan’s pay rates are more than just figures on a spreadsheet; they are a reflection of the nation’s changing economic landscape, cost of living, and labour standards. Understanding these standards enables you to make reasonable, competitive offers and maintain compliance when hiring in Japan.

Metric	Value (2025)	What It Means for Employers
National Minimum Wage	~¥1,118 per hour	A historic ¥63/hour increase—the biggest in over 20 years—means payroll budgets need a fresh look.
Regional Wage Variance	¥951–¥1,163 per hour	Big cities like Tokyo sit at the top end, while smaller regions have lower rates. Location matters when setting pay.
Average Annual Salary	~¥5.42 million JPY (~US $37K)	A useful benchmark for full-time roles across most industries.
Median Monthly Salary	¥472,000 (~US $3,300)	Gives a truer sense of what most employees take home.
Entry-Level and Part-Time Pay	~¥290,000/month; ~¥1,597/hour	Handy when planning packages for junior hires, interns, or hourly workers.

Key Takeaways for Payroll Planning

1. Wages are Rising

The most significant minimum wage jump in decades means higher payroll costs for both existing staff and new hires.

2. Location makes a Difference

Pay in Tokyo can be hundreds of yen per hour higher than in regional areas, so one-size-fits-all salaries don’t always work.

3. Look at the Median, not just the Average

This gives a more realistic view of what employees earn and helps keep your offers competitive.

4. Plan for all types of hires

Whether you’re taking on full-time staff, part-timers, or short-term contractors, knowing market rates keeps you ahead of the curve.

Is Payroll Outsourcing in Japan the Right Move for a Business?

Managing payroll in Japan involves more than just cutting paychecks—it’s about staying on top of complex regulations, reporting duties, and social insurance contributions. For many companies, especially those growing or expanding, outsourcing payroll can be a smart way to keep things simple, reduce compliance risk, and free up time to focus on the bigger picture.

Here’s a quick breakdown of the benefits, challenges, and strategic value of payroll outsourcing, based on what matters when making the decision.

Criteria	Pros	Cons	Strategic Value
Compliance with Japanese labour laws	Accurate statutory handling	Limited in-house control	Reduces legal exposure
Resource allocation	Saves time on admin tasks	Initial setup efforts	Frees up internal teams for core work
Payroll accuracy	Minimises calculation errors	Vendor response times may vary	Maintains payroll reliability
Operational costs	Reduces the need for the whole payroll staff	May involve service fees	Predictable and scalable cost structure
Business expansion	Easily scales across locations	Switching providers can be disruptive	Supports multi-site or global growth
Data handling & security	Professional data safeguards	Dashboard access may differ	Protects sensitive employee and financial data

Payroll Dynamics in Japan: What’s Changing and Why It Matters

In Japan, payroll is no longer just an administrative task happening quietly in the background. It’s becoming a strategic function that directly supports business growth. From new regulations to rising employee expectations and rapid digital transformation, several key trends are reshaping how companies manage compensation today.

Automation of Payroll Processes

1. Businesses are adopting automated payroll tools to minimise manual errors and reduce processing time.

2. These systems help stay on top of local tax and insurance requirements by flagging compliance gaps.

3. The result: more accurate, on-time payments and a lighter administrative load for HR and finance teams.

Shift to Digital Payment Methods

1. Digital options like PayPal and mobile wallets are now complementing traditional bank transfers.

2. This offers faster, more flexible payment experiences, especially valued by younger employees and remote talent.

3. It also enables smoother integration with other digital HR systems.

Flexible Compensation Models

1. Employers are experimenting with new pay models like early wage access, remote work allowances, and project-based bonuses.

2. These personalised benefits help companies stand out in a competitive hiring market.

3. They also reflect a shift toward employee-centric payroll practices.

Enhanced Focus on Compliance and Risk Management

1. With labour laws and tax codes frequently updated, staying compliant is more complex than ever.

2. Payroll platforms with built-in alerts and audit logs help mitigate legal risks.

3. Taking a proactive approach helps protect your company’s reputation while showing your team that you’ve got their back.

Integration with Global Payroll Systems

1. Companies operating across borders are moving toward unified payroll platforms.

2. This supports better handling of expat salaries, multi-currency payments, and localised reporting.

3. The outcome is greater visibility and control over workforce costs globally.

How Can You Manage Payroll Across Borders While Staying Compliant in Japan?

Managing payroll across countries isn’t just about paying people on time. It’s about giving your team a smooth, consistent experience—no matter where they are. If operating in Japan or expanding into it, here are some practical ways to build a strong and scalable payroll setup:

1. Build a Consistent Payroll Framework

It helps to create standard processes across all regions. When the structure is consistent, onboarding new countries becomes much easier. Everyone knows what to expect, and it cuts down on confusion when scaling up.

2. Put Local Compliance First

Japanese labour laws, tax systems, and social insurance rules are unique—and they change often. You don’t need to track everything yourself, but you do need local expertise. Partnering with people who know the terrain helps you avoid missteps.

3. Centralise Your Payroll

Using a unified system means you’re not juggling spreadsheets or regional tools. You get a clear view of payroll activity in every location, can generate reports easily, and ensure each country follows the same baseline of accuracy.

4. Stay Adaptable with Currency and Tax Rules

Exchange rates fluctuate. Tax slabs shift. Payroll software that can handle real-time changes takes the stress out of these variables and keeps salary calculations on point. That’s key to maintaining high trust and minimising errors.

5. Make Data Security a Priority

More countries, including Japan, are tightening data privacy regulations. Your payroll system should be equipped to keep sensitive information safe. This isn’t just about compliance—it’s about protecting your team and your brand.

6. Cover All Types of Workers

Whether someone is full-time, on a contract, or working remotely from another country, your payroll should accommodate different setups. Japan’s employment categories have specific rules, so flexibility is essential.

7. Run Regular Payroll Reviews

Set time aside to audit your payroll system. Even minor inconsistencies can turn into larger compliance risks over time. Routine check-ins keep things clean and show regulators that you’re being proactive.

8. Connect Payroll with HR and Finance

Your payroll doesn’t exist in a vacuum. When it talks to your HR and finance systems, you get better visibility on headcount, costs, and projections. It also reduces redundant work and accelerates internal processes.

What Should You Look for When Selecting a Payroll Company in Japan

Picking a payroll partner in Japan isn’t just about checking off requirements. It’s about finding someone who understands the way things work here and can make payroll simple for your team. Here’s what to keep in mind:

1. Deep Understanding of Local Rules

Japan has specific laws around payroll, taxes, and social insurance. You’ll want a provider who knows these inside out so you don’t have to worry about compliance.

2. Handles Both Local and International Teams

If you’re managing employees in different countries, choose someone who can support global operations without missing local details.

3. Clear Communication (in English and Japanese)

Communication should be easy. It helps if your provider can explain everything in plain English and also handle local discussions in Japanese.

4. Smart and Secure Tech

Look for a platform that’s easy to use, automates routine tasks, and protects your team’s data according to Japanese standards.

5. Flexible Support That Scales With You

Whether you’re growing or adjusting your operations, your payroll setup should keep up—not hold you back.

6. Transparent Pricing

No one likes surprise fees. Make sure the pricing is straightforward and clearly outlined from the start.

7. Proven Experience

It helps to work with a provider who’s done this before. Ask for examples or case studies to see how they’ve supported similar businesses.

conclusion

Running payroll in Japan isn’t just about paying people on time. It’s about navigating local rules, earning employee trust, and staying on the right side of compliance. From tax to social insurance to reporting, Japan’s regulations don’t always follow global norms. That’s why having the proper support can make your life a lot easier and your operations a lot smoother.

At Galaxy Group, we work with businesses to simplify payroll operations in Japan. From hiring your first employee and exploring EOR solutions for quicker market entry to fine-tuning existing payroll processes, our team offers local knowledge and hands-on support. We help you stay compliant, reduce manual effort, and create a smoother experience as you grow your team in Japan.

Our Quick Guide on : A Guide to Attaining Work Visas in Japan: Eligibility, Essentials and Key Insights

Need help running payroll in Japan?

Let’s simplify your setup and keep you compliant.

FAQ’S

Is it hard to run payroll in Japan as a foreign company?

It can be tricky without local expertise. Japan has unique labour laws, tax rules, and reporting standards. That’s why many businesses prefer to partner with a local payroll company to get it right from day one.

What do I need to know about taxes and social insurance in Japan?

Employers in Japan are responsible for withholding income tax and contributing to health insurance, pension, and unemployment insurance. These rules change often, so staying up to date is essential.

Can I outsource payroll in Japan completely?

Yes, most companies do. Outsourcing your payroll means a local partner handles everything—from salary calculations and payslips to tax filings and social insurance submissions.

How are salaries typically paid in Japan?

Salaries are usually paid monthly via bank transfer. It’s also common to provide bonuses twice a year. Timeliness and accuracy are highly valued by employees here.

What’s the best way to stay compliant while scaling in Japan?

The easiest way is to work with a payroll provider who understands Japanese regulations. They’ll help you manage payroll, reporting, and contributions, even as your team grows or changes.

Guide to Corporate Tax Filing in Singapore 2025

August 30, 2025 by galaxy

August 30, 2025

Guide to Corporate Tax Filing in Singapore 2025

As we enter the second half of 2025, businesses in Singapore must begin preparing for corporate tax filing for the Year of Assessment (YA) 2025. Compliance with IRAS is more than a legal obligation—it is central to sound business governance for both start-ups and established enterprises.

This year brings key changes, including enhancements to the filing process and new digital tools from IRAS that simplify compliance. By preparing early, businesses can ease the pressures of tax season and manage their obligations with confidence.

In this blog, we outline essential deadlines, required forms, recent IRAS updates, and common mistakes to avoid. We also consider how partnering with a professional tax and accounting firm can streamline filing and provide valuable strategic insights.

Table Of Content

Overview of Corporate Tax Filing in Singapore

In Singapore, corporate tax filing is a statutory obligation for all registered companies. Businesses are required to file their income tax returns with the Inland Revenue Authority of Singapore (IRAS), declaring chargeable income—profits after deducting allowable business expenses.

Although the corporate tax rate is fixed at 17%, many organisations benefit from partial exemptions, rebates, and government incentives that effectively reduce their overall tax liability. This favourable tax framework continues to position Singapore as an attractive destination for regional headquarters and international investors.

The process typically includes three key steps:

1. Submitting Estimated Chargeable Income (ECI)

An early estimate of taxable income, usually due within three months after the financial year ends, unless exempted.

2. Choosing the Correct Tax Form

Companies must file either Form C-S, Form C-S (Lite), or Form C based on their revenue and business type to ensure proper submission.

3. Meeting Filing Deadlines

Timely filing is crucial to avoid penalties and maintain compliance.

Making tax filing part of regular financial management not only simplifies the process but also helps businesses optimise cash flow and access government benefits. Seeing tax filing as a strategic concern instead of a mundane task can enhance your business’s financial well-being and bolster its position in Singapore’s corporate ecosystem.

Key Updates from IRAS for Year of Assessment (YA) 2025

The Inland Revenue Authority of Singapore (IRAS) implements changes every Year of Assessment (YA) that may have an impact on how businesses handle deductions, file taxes, and apply for reliefs. It’s critical to stay up to date on these changes to maximise your tax position, prevent surprises, and stay in compliance.

The following summarises the key changes for YA 2025 that companies need to know about:

Revised Income Tax Treatment

1. Capital Allowances: Low-value assets (under S$5,000) can now be fully expensed in the year of purchase, simplifying capital allowance claims.

2. FSIE Regime: Foreign-sourced dividends, branch profits, and service income must meet enhanced economic substance criteria to qualify for tax exemption.

3. Documentation Requirements: Stricter rules on documentation and classification for asset purchases and expense claims are now in effect to ensure compliance.

Enhanced Digital Filing Requirements

1. From this year, IRAS requires all companies to submit corporate tax returns exclusively through the myTax Portal.

2. Paper submissions are no longer accepted, streamlining the filing process.

3. Digital filing reduces errors and enhances accuracy.

4. Online submissions enable faster processing, improving overall tax administration efficiency.

New Guidance and Clarifications

1. IRAS has updated its e-Tax Guides to make it easier to identify deductible expenses.

2. Employee benefits, entertainment, and R&D expenses are a key focus.

3. These updates help businesses stay compliant and claim all eligible deductions.

4. Clarifications on start-up tax exemptions now cover mergers, acquisitions, and restructuring.

5. Understanding these changes helps businesses plan taxes better and avoid compliance issues.

As Singapore’s government adjusts to new policies and the economy, tax laws frequently change. Maintaining IRAS updates enables your company to maximise tax benefits, stay in compliance, and steer clear of expensive mistakes.

Simply put, being informed offers you the opportunity to save money, expedite your procedures, and feel secure knowing that your tax returns are accurate—it’s not just about fulfilling regulations.

What Are the Key Corporate Tax Filing Deadlines for 2025?

Timely corporate tax filing in Singapore is more than a procedural requirement; it is a fundamental aspect of sound corporate governance. Missing a deadline can disrupt financial operations and expose businesses to penalties, interest charges, or enforcement action from the Inland Revenue Authority of Singapore (IRAS). For the Year of Assessment (YA) 2025, the first step towards compliance is a clear understanding of the filing timeline.

Filing Item	Deadline
Estimated Chargeable Income (ECI)	Within 3 months of the end of the financial year
Form C, Form C-S, or C-S (Lite)	30 November 2025

Understanding the Deadlines

1. Estimate Chargeable Income(ECI)

Non-exempt companies must submit their ECI within three months of the end of their fiscal year (FYE).

IRAS receives an early indication of your company’s taxable income for the year from this estimate. Unless your business is eligible for an administrative waiver, the ECI must be submitted even if your estimated income is zero.

2. Form C, C-S, or C-S (Lite)

This is the yearly income tax return for your business. After your financial statements are finalised, they need to be filed.

Larger or more complex businesses may need to use the complete Form C, but the majority of companies are eligible to file the simplified versions, Form C-S or C-S (Lite).

The submission deadline is November 30th, regardless of your FYE.

Managing Your Filing Timeline and Staying Compliant

On-time corporate tax filing keeps your company in compliance and helps you avoid needless fines.

The tax year is determined by your Financial Year-End (FYE). For instance, your income is assessed in YA 2025 if your FYE is December 31, 2024. Planning makes filing go more smoothly.

You can update your Estimated Chargeable Income (ECI) within IRAS’s timeframe if your income projections change after you’ve submitted it. By doing this, overpayment or underpayment can be prevented.

A Notice of Assessment (NOA) will be sent by IRAS following filing. Usually, you have one month to pay. GIRO is widely used by businesses to distribute payments and control cash flow.

Missing deadlines can trigger estimated assessments, penalties of up to $1,000, and in severe cases, legal action. Staying organised and filing on time protects your business and keeps things running smoothly.

Choosing the Right Tax Form

IRAS provides three distinct tax return forms, each tailored to different business profiles. Choosing the appropriate form streamlines compliance, minimises administrative burden, and reduces the likelihood of unnecessary correspondence with the tax authority.

A Quick Breakdown of the Tax Forms

Form	Who It’s For	What It Involves
Form C	Any company, regardless of size	The most detailed option. You’ll need to submit full financials and supporting documents.
Form C-S	Companies earning SGD 5 million or less	A simpler version. Financial statements are only required if IRAS asks.
Form C-S (Lite)	Smaller companies earning SGD 200,000 or less	The easiest form. Minimal reporting. Great for tiny, straightforward businesses.

How to Choose the One That Fits?

Here’s what to think about when deciding which form to use:

1. How much revenue you’re making: This helps determine if you qualify for the simplified options.

2. How complex your business is: If you’ve got overseas income, multiple entities, or a group structure, you’ll likely need to file the complete Form C.

3. How ready your documents are: If your financials aren’t finalised, a simplified form may be more practical (as long as you qualify).

Getting the form right from the start helps avoid delays, extra paperwork, or questions from IRAS later on. It’s a small but essential step toward an easier tax season.

How to Avoid Common Corporate Tax Filing Pitfalls in Singapore?

Pitfall	Why It Matters	How to Stay on Track
Disorganised Records	Incomplete or inaccurate records can lead to filing mistakes and missed deductions.	Maintain up-to-date accounts and reconcile them regularly.
Missed Deadlines	Late ECI or Form C/C-S submissions can lead to penalties and compliance issues.	Follow a clear filing calendar and prepare documents ahead of time.
Incorrect Tax Form	Using the wrong form can delay processing and require resubmission.	Review the IRAS criteria each year to ensure the correct form is used.
Ineligible Claims	Claiming deductions you don’t qualify for may trigger audits or repayments.	Verify all claims against the latest IRAS guidelines before filing.
Skipping Final Review	Unchecked submissions may contain avoidable mistakes.	Always conduct a thorough pre-submission review.

How does a Tax and Accounting Firm Adds Value Beyond Compliance?

For many organisations, working with a tax or accounting firm is often viewed as a procedural necessity—ensuring returns are filed accurately and compliance requirements are met. However, the right firm can serve as a genuine strategic partner, delivering far more than regulatory assurance.

1. Strategic Tax Planning That Looks Ahead

Advisors go beyond preparing returns by identifying opportunities to minimise tax liabilities while remaining fully compliant with IRAS guidelines. Examples include:

Research and Development (R&D) tax benefits to encourage innovation
Productivity and Innovation Credit (PIC) schemes to enhance efficiency
Double Tax Deduction for Internationalisation (DTDi) for expanding into overseas markets

Proactive tax planning ensures decisions are integrated into the broader business strategy rather than addressed only at filing time.

2. Staying Ahead of Regulatory Changes

Singapore’s tax laws are still changing. A professional firm ensures compliance while optimising available benefits by staying up to date on legislative updates, including modifications to filing requirements and new incentives.

3. Expertise in Structuring and Complex Transactions

Corporate restructuring, inter-company dealings, and cross-border taxation require careful planning. Experienced advisors design tax-efficient, compliant structures that minimise risks and optimise financial outcomes.

4. Enhancing Operational Efficiency

Time and effort are frequently required for tax management, particularly during hectic filing seasons. By collaborating with a capable company, internal teams can concentrate on long-term growth and key business priorities. These businesses can increase accuracy, streamline submissions, and produce reports more quickly and clearly with the help of contemporary digital tools.

5. Supporting Growth and Transformation

During expansion, restructuring, or entry into new markets, having access to specialised expertise provides clarity and confidence in decision-making. Advisors assist in foreseeing difficulties, coordinating plans with corporate objectives, and laying the groundwork for sustained success.

Filing taxes is just the starting point. The real value comes from having a partner who is proactive, insightful, and committed to helping your business thrive.

Also Read : Effective Taxation & Tax Planning Strategies for Businesses in Hong Kong Tax and Accounting Support to help your Business Achieve Unmatched Growth

Corporate Tax Filing Checklist

There is no need for a last-minute, hectic rush when filing corporate taxes. The entire process becomes more accurate, less stressful, and more seamless with a well-defined procedure and consistent preparation. To help tax teams stay on course from beginning to end, this checklist divides the procedure into manageable steps.

Stage	Key Actions	Deadline / Notes
Pre-Filing Preparation	✅ Finalise audited or unaudited financial statements in accordance with reporting standards. ✅ Verify that revenue, expenses, and adjustments are accurate and complete. ✅ Calculate Estimated Chargeable Income (ECI) using the most recent financial data. ✅ Prepare supporting schedules for capital allowances, donations, and other relevant deductions.	Submit ECI via myTax Portal within 3 months after the financial year-end.
Form Selection	✅ Determine eligibility for Form C-S or C-S Lite, based on revenue and qualifying conditions. ✅ Select Form C for businesses with complex income sources, overseas operations, or group structures.	Review IRAS eligibility criteria annually to ensure correct form selection.
During Filing	✅ File the corporate tax return exclusively via myTax Portal. ✅ Include all required schedules, declarations, and documentation in a single submission to prevent delays.	Filing deadline: 30 November 2025.
Avoiding Common Pitfalls	❌ Delaying preparation until the last minute. ❌ Submitting the wrong form and requiring resubmission. ❌ Omitting necessary supporting documents.	These errors can lead to penalties, processing delays, and additional compliance scrutiny.
Post-Filing Follow-Up	✅ Monitor IRAS communications and respond promptly to any clarifications requested. ✅ Archive all submission confirmations, computations, and schedules for reference or audit purposes. ✅ Arrange timely payment within one month of the Notice of Assessment to avoid late payment penalties.	Payment is due within 1 month of receiving the NOA.

conclusion

A well-managed tax filing process in Singapore does more than ensure compliance—it supports financial clarity and builds confidence with stakeholders.

To prepare for YA 2025, businesses should stay updated on IRAS requirements, keep records in order throughout the year, and choose the correct return form well in advance. Early preparation reduces the risk of errors and helps ease the pressures of tax season.

With its expertise in corporate tax and cross-border compliance, Galaxy Group guides businesses through every stage, from planning and filing to follow-up. By offering tailored strategies, detailed reviews, and practical support, the team helps organisations meet their obligations smoothly while keeping future growth in focus.

A structured, forward-looking approach not only ensures compliance but also strengthens financial resilience and long-term sustainability.

Stay Ahead This Tax Season

Get expert tax and accounting support to ensure timely, accurate, and hassle-free corporate tax filing in 2025.

FAQ’S

Which companies are required to file corporate income tax in Singapore?

All companies incorporated in Singapore, both private and public, as well as foreign company branches with operations in Singapore, must file corporate income tax. Sole proprietors and partnerships are taxed under personal income tax instead of corporate tax.

What are the essential filing deadlines for 2025?

The Estimated Chargeable Income (ECI) must be filed within three months after the company’s financial year-end.

The final corporate tax return, whether it is Form C, Form C-S, or Form C-S Lite, needs to be filed by 30 November 2025.

Are there any tax rebates available for the Year of Assessment (YA) 2025?

Yes. Companies can receive a 50% corporate tax rebate, capped at S$40,000. In addition, qualifying companies with at least one local employee may receive an extra S$2,000 cash grant.

What is Singapore’s current corporate tax rate?

The standard corporate tax rate is 17% on chargeable income. However, many companies pay less in effective tax due to exemptions and incentives, such as startup tax relief or partial tax exemptions.

What tools or guidance does IRAS provide for businesses?

The Inland Revenue Authority of Singapore (IRAS) offers updated resources, including step-by-step guides, FAQ pages, and basic tax calculators to help companies prepare and file their returns accurately.

From an EOR Service to a Single Global Payroll Provider?

August 29, 2025 by digitalgowhere

August 29, 2025

From an EOR Service to a Single Global Payroll Provider?

As companies expand globally, payroll solutions must also evolve to support sophisticated operations. Employers of Record (EORs) offer a practical solution for rapid market access, eliminating the need to establish local legal structures, simplifying hiring, reducing compliance requirements, and streamlining operations with minimal infrastructure.

However, as teams become more geographically dispersed, the EOR model can become restrictive. Each new hire incurs additional costs, reporting varies by country, and managing multiple suppliers can result in siloed processes and reduced visibility into compliance.

The transition to a global payroll provider provides a centralised and integrated approach. The transition gives more control, standardised reporting, and improved compliance, thereby aligning payroll management with more organisational objectives and long-term growth strategies.

This blog explores the distinctions between EORs and global payroll providers and highlights the advantages of payroll consolidation.

Table Of Content

What’s the Difference Between an EOR and a Global Payroll Provider?

When hiring across borders, companies often choose between two models:

EOR or Global Payroll Provider. Both offer support for managing international teams, but they solve different challenges. An EOR steps in as the legal employer on behalf of a business. It handles everything from employment contracts and payroll to local compliance and statutory benefits. This makes it easier to hire in new markets without setting up a regional entity. It’s a practical option for companies looking to test new regions or hire just a few employees in unfamiliar jurisdictions.

A Global Payroll Provider On the other hand, supports businesses that already have entities in place. They help streamline payroll processing across multiple countries by managing calculations, deductions, local filings, and employee payments, while also offering consolidated reporting. The business remains with the legal employer, but the payroll burden is centralised and simplified.

Here’s a quick comparison:

Aspect	Employer of Record (EOR)	Global Payroll Provider
Legal Employer	The EOR becomes the legal employer and takes on local employment responsibilities.	The company remains the legal employer and oversees employment obligations directly.
Local Entity Requirement	No local entity is needed; the EOR covers this on behalf of the company.	A local entity must be established in each country where employees are hired.
Ideal Use Case	Helpful in entering new markets, short-term projects, or hiring a small number of employees.	Better suited for businesses with a long-term presence and larger teams in multiple regions.
Payroll Management	Fully managed by the EOR, including payslips, tax filings, and employee payments.	Managed by the company with support from the provider for calculations and compliance.
Compliance Handling	The EOR takes care of most legal and regulatory responsibilities.	Compliance is shared, and the company must stay aligned with local regulations.

The choice between an EOR and a global payroll solution typically depends on the stage of international expansion. EORs provide speed and agility for entering new markets, while global payroll systems support scalability, consistency, and operational control over the long term.

When is an EOR the Right Choice for Global Hiring?

An EOR serves as a strategic solution for companies expanding internationally without setting up legal entities in each country. The following situations highlight when partnering with an EOR can be the most effective approach to global hiring:

1. Entering a new international market

For organisations exploring new markets, establishing a legal presence can delay go-to-market timelines. An EOR enables quick hiring of local talent while maintaining full compliance with local employment laws, making it ideal for pilot programs or market testing.

2. Avoiding the Cost and Complexity of Entity Setup

Setting up a legal entity in a new country often involves considerable time, cost, and an in-depth understanding of local rules. For companies seeking to hire internationally without making a long-term investment upfront, an EOR provides a practical alternative. It takes care of employment contracts, payroll, taxes, and benefits on the company’s behalf.

3. Supporting Small Teams in Multiple Countries

When building distributed teams with only one or two employees in each location, entity creation becomes inefficient. An EOR offers a practical, centralised solution for managing employment across several jurisdictions, reducing both administrative and compliance overhead.

4. Hiring for Short-Term or Project-Based Roles

For short-term staffing requirements, like seasonal employees, consultants, or project specialists, EORs offer versatile support. They handle onboarding, hire-to-retire, and offboarding in accordance with local laws, enabling companies to scale teams up or down to meet the project’s changing requirements.

5. Navigating Periods of Organisational Change

During mergers, acquisitions, or internal restructures, maintaining continuity in workforce management can be challenging. EORs can provide stable employment arrangements during transitions, ensuring that teams remain operational while legal structures are still being finalised.

6. Reducing Risk in Employment Compliance

Global hiring requires adherence to country-specific laws regarding wages, benefits, taxes, and social contributions. An EOR takes on the legal responsibility of employing staff, helping organisations remain compliant with local regulations while streamlining HR and finance operations.

An EOR is particularly effective for organisations seeking speed, flexibility, and compliance in global hiring. It acts as a bridge to new markets and ensures legal peace of mind, whether for short-term projects or the early stages of international expansion.

What can a Global Payroll Provider Offer?

Managing payroll becomes increasingly complex as businesses expand into new markets. A global payroll provider can simplify the process by offering local expertise, ensuring compliance, and delivering scalable systems that support international growth.

Understanding Local Rules

1. Stays up-to-date with changing tax laws, labour regulations, and reporting standards in each country.

2. Ensures payslips, deductions, and filings are done correctly in line with local legislation.

3. Helps avoid fines and compliance risks by handling statutory requirements accurately.

A Single, Centralised System

1. Combines payroll processes across countries into one streamlined platform.

2. Offers better visibility and control over payroll operations in different regions.

3. Reduces the need to coordinate with multiple local vendors or systems.

Hassle-Free Payments in Local Currencies

1. Supports on-time salary disbursement in multiple currencies.

2. Manages currency conversions, local banking rules, and payment timelines.

3. Minimises errors in cross-border payments and ensures a reliable employee experience.

Room to Grow

1. Scales easily as the business enters new markets or hires across regions.

2. Reduces the need for internal payroll expansion or new country-specific processes.

3. Allows companies to focus on growth without worrying about backend payroll operations.

Keeping Data Safe

1. Uses secure platforms that follow global data protection laws like GDPR.

2. Safeguards sensitive employee information with encryption and access controls.

3. Reduces the risk of data breaches or non-compliance in global jurisdictions.

Managing More Than Just Payroll

1. Offers additional services such as statutory benefits administration, social insurance management, and leave tracking.

2. Helps standardise HR practices across different countries.

3. Reduces administrative load on internal teams while improving employee satisfaction.

How to Know When It’s Time to Move Beyond an EOR?

Working with an EOR can be an innovative and flexible way to hire internationally, especially when entering new markets or managing short-term projects. But as operations grow, there may come a time when a more permanent setup makes sense.

1. Team Building:

Expansion of local teams may be less feasible for EORs; an integrated legal entity provides complete control over HR activities.

2. Long-Term Strategy:

Creating a legal entity involves commitment and renders long-term regional development feasible.

3. Operational Integration:

Direct hiring facilitates better integration with in-house teams, policies, and workflows.

4. Cost Savings:

Scaling up quickly under an EOR may be costly; a local organisation can be more economical.

5. Regulatory Compliance:

Specific industries or sectors require a legal entity to fulfil licensing, contractual, or regulatory requirements.

Benefits of Using a Global Payroll System Across Countries

Managing payroll across multiple jurisdictions can quickly become complex. Implementing a single global payroll system creates a centralised and consistent approach. It helps businesses stay compliant, streamline operations, and support international growth with confidence.

Brings Consistency to Payroll Operations

1. Ensures uniform payroll schedules, formats, and documentation across regions

2. Minimises the risk of payment delays and calculation discrepancies

3. Supports a consistent employee experience, regardless of location

Offers Better Visibility and Control

1. Provides a centralised view of payroll data across all operating countries

2. Facilitates budget planning, workforce tracking, and risk management

3. Supports leadership with accurate, real-time financial insights

Simplifies Compliance with Local Laws

1. Tracks changes in tax legislation, labour codes, and statutory contributions

2. Reduces exposure to non-compliance penalties and legal complications

3. Makes audit preparation and statutory reporting more efficient

Streamlines Daily Operations

1. Decreases reliance on manual processes and fragmented systems

2. Reduces administrative load for HR, finance, and payroll teams

3. Enhances process efficiency through automation and system integration

Scales with Business Growth

1. Supports onboarding in new markets without needing separate systems

2. Enables faster geographic expansion while maintaining payroll integrity

3. Consolidates provider management through a single global platform

6-Point Checklist Before Switching from an EOR to Global Payroll

Transitioning from an EOR (Employer of Record) to a global payroll provider represents a transition from short-term market entry strategies to repeatable, cross-border operations. Upfront assessment of the key areas guarantees compliance, operational efficiency, and long-term value.

Here’s a 6-point checklist to guide the decision:

Checklist Point	Key Actions
Readiness of the Local Entity	✅ Ensure the business is officially registered in each operating country. ✅ Set up local bank accounts, tax registrations, and employment systems. ✅ Confirm the entity can independently manage payroll, hiring, and compliance.
Understanding of Local Payroll Requirements	✅ Learn local tax brackets, wage laws, and statutory benefits. ✅ Align payroll cycles with local deadlines to avoid penalties. ✅ Verify worker classifications to prevent legal issues.
Suitability of Internal Systems	✅ Evaluate if HR and finance tools support multi-country payroll. ✅ Check adaptability to varied pay structures and compliance rules. ✅ Ensure adherence to data privacy regulations in all locations.
Compliance and Documentation Requirements	✅ Implement internal compliance checks for audits and inspections. ✅ Keep contracts, payslips, and payroll records secure and organised. ✅ Understand local reporting formats and submission timelines.
Selection of a Global Payroll Provider	✅ Choose a provider with expertise in target markets. ✅ Ensure capability for salary processing, tax filings, and compliance. ✅ Opt for providers offering scalable solutions and local knowledge.
Internal Operational Readiness	✅ Define roles and responsibilities across HR, finance, and legal. ✅ Train teams on country-specific payroll practices. ✅ Create a streamlined process for payroll queries and issue resolution.

conclusion

Many businesses find EOR services to be a helpful starting point when entering new markets. But as operations grow and become more complex, there is often a need for greater visibility, consistency and control. In such cases, a more integrated payroll approach becomes essential.

Transitioning to a single global payroll provider isn’t just about simplifying systems. It’s about building a foundation that can scale with the business, support compliance across jurisdictions, and bring payroll, finance, and HR onto the same page. It enables teams to transition from reactive management to proactive planning, all while maintaining focus on local requirements.

Galaxy Group works closely with businesses navigating this shift. With regional expertise and scalable infrastructure, the focus is on helping organisations streamline operations, reduce complexity, and plan confidently for what’s ahead.

As global workforces evolve, so should the way payroll is managed. Choosing the proper setup is a strategic decision rather than a technical one.

Ready to streamline your global payroll?

Talk to our team and find the proper setup for your growing business.

FAQ’S

What’s the difference between an EOR and a global payroll provider?

An EOR becomes the legal employer for your overseas team and handles everything from contracts to compliance. A global payroll provider supports your in-house HR team by managing payroll across multiple countries once you’ve set up your legal entity.

When is the right time to switch from an EOR to a global payroll provider?

If your team is growing, you’ve set up a local entity, or you want more control over compliance and reporting, it’s likely time to move to a global payroll model. It’s a natural step for companies ready to scale sustainably.

Can a global payroll provider handle minimum wage changes in different countries?

Yes. Most global payroll platforms stay updated with local labour laws and adjust payroll calculations automatically, so you remain compliant without tracking every change yourself.

Is switching to a global payroll provider more cost-effective than staying with an EOR?

Often, yes. EORs work well for early-stage expansion, but they can become expensive as your team grows. A global payroll setup typically reduces costs and gives you more control over operations.

Can I use both an EOR and a global payroll provider at the same time?

Yes. Many companies take a hybrid approach by using EORs in countries where they don’t yet have an entity and a global payroll where they do. This allows for flexible and phased expansion.

Guide to Payroll in Vietnam

August 28, 2025 by digitalgowhere

August 28, 2025

Guide to Payroll in Vietnam

Payroll management in Vietnam is a critical function that goes beyond the distribution of monthly salaries. It requires a sound understanding of wage structures, statutory contributions, and local labour regulations to ensure compliance and fairness.

For organisations establishing a presence, expanding teams, or managing a local workforce, effective payroll processes from the outset are essential. Transparent and accurate practices build employee confidence, foster trust, and support organisational efficiency.

This guide outlines the principal aspects of payroll in Vietnam, including minimum wage requirements, salary benchmarks, statutory deductions, reporting obligations, and final settlements. It also considers the advantages of outsourcing payroll, offering businesses a practical means of reducing administrative complexity while maintaining compliance and operational focus.

Table Of Content

How Payroll Works in Vietnam?

Payroll in Vietnam operates within a structured legal framework that requires employers to comply with social insurance obligations, tax regulations, and labour laws. A well-defined payroll system is essential to ensure accuracy and compliance with these requirements.

Most companies process payroll on a monthly basis, with salaries typically paid by the final working day of the month. In addition to gross wages, payroll calculations must include mandatory deductions for personal income tax, social insurance, health insurance, and unemployment insurance, as stipulated by Vietnamese law.

Here’s what the process usually looks like:

1. Start with the Gross Salary

It begins by calculating each employee’s total earnings—this includes their base salary, fixed allowances, overtime, and any bonuses agreed upon in the contract.

2. Apply Employee Deductions

Next, certain mandatory deductions are made from the employee’s salary. These usually cover:

Social Insurance
Health Insurance
Unemployment Insurance
Personal Income Tax

The rates are set by the government and need to be reported and paid monthly.

3. Add Employer Contributions

Additionally, employers are required to contribute to the same insurance schemes on behalf of their employees. These costs are separate from what is deducted from the salary.

4. Issue Payslips

Once deductions are done, employees receive a payslip with a breakdown of gross pay, deductions, and net pay. This step keeps things transparent and helps avoid confusion.

5. Submit Reports

Companies must regularly report payroll data to tax and insurance authorities. There’s also an annual income tax reconciliation, especially for employees with changing or multiple income sources.

6. Stay Updated on Regulations

Payroll regulations in Vietnam are subject to frequent and sometimes unexpected changes. For businesses—especially those newly entering the market—it is essential to remain vigilant and up to date to avoid compliance risks.

What Is the Minimum Wage and Average Salary in Vietnam?

Minimum Wage in Vietnam

Vietnam’s minimum wage structure is divided into two main categories:

1. Common Minimum Wage

This is set at VND 2,340,000 (approximately US$93) and is used to calculate salaries for employees in state-owned organisations and enterprises. It also forms the basis for calculating social insurance contributions for all enterprises (with the maximum social contribution set at 20 times the standard minimum wage).

2. Regional Minimum Wage

Employees of non-state businesses are subject to the regional minimum wage, which is determined by four regions designated by the government. Following a two-year freeze in spite of inflation, these were raised by 6% beginning in July 2024. The updated prices are:

Region	2022 Minimum (VND)	2022 Minimum (US$)	2024 Minimum (VND)	2024 Minimum (US$)
Region I	4,680,000	192	4,960,000	196
Region II	4,160,000	171	4,410,000	175
Region III	3,640,000	150	3,860,000	153
Region IV	3,250,000	134	3,450,000	137

3. Hourly Minimum Wages (by region, July 2024):

Region I: VND 23,800 (US$0.94)
Region II: VND 21,200 (US$0.84)
Region III: VND 18,600 (US$0.74)
Region IV: VND 16,600 (US$0.66)

Even if workers are paid on a daily or weekly basis, employers are still required to make sure that they all receive at least these minimums. The workplace’s location determines the applicable regional minimum; if a business serves several subregions, all employees must be covered by the highest applicable rate.

Average Salary in Vietnam

Depending on the sector, region, and degree of experience, salaries in Vietnam can differ significantly. Although there isn’t a set national average, the following are essential things to remember:

By Region

Location	Monthly Average Salary (VND)	Equivalent in USD	Notable Insights
Hanoi & Ho Chi Minh City	10,500,000 – 18,000,000	$415 – $710	Salaries are significantly higher in these tier-1 cities, especially in sectors like tech, finance, and real estate.
Secondary Cities (e.g. Da Nang, Hai Phong)	8,000,000 – 12,000,000	$316 – $474	Slightly lower cost of living leads to more moderate pay, but strong growth in logistics and tourism.

By Sector

Sector	Monthly Average Salary (VND)	Equivalent in USD	Talent Market Insights
Information Technology	20,000,000 – 35,000,000	$790 – $1,380	There is a high demand for skilled developers and tech engineers.
Manufacturing & Logistics	9,000,000 – 15,000,000	$355 – $590	One of the largest employment sectors is characterised by steady wage growth.
Hospitality & Retail	6,000,000 – 10,000,000	$236 – $395	Entry-level dominated; seasonal wage fluctuations are common.
Accounting & Finance	10,000,000 – 18,000,000	$395 – $710	Competitive salaries, especially in international or regional firms.

Key Takeaways for Employers

The Vietnamese government has established a strictly regulated wage system.
Employers must adhere to region-specific minimum wage requirements, irrespective of the frequency of payment.
While compliance is mandatory, offering wages above the legal minimum is often necessary to attract and retain skilled employees.
Payroll calculations must consider factors such as regional wage levels, job role, and statutory contributions including health and social insurance.

Working Hours, Overtime Pay, and Employer Compliance in Vietnam

Establishing a workforce that is both efficient and compliant requires a clear understanding of Vietnam’s labour regulations. The Labour Code of 2019, together with guidance issued by the Ministry of Labour, Invalids, and Social Affairs (MOLISA), sets out the legal framework governing standard working hours, overtime provisions, and employer obligations. The key requirements are outlined below.

Standard Working Hours

Category	Details
Normal Working Hours	Up to 8 hours per day, 48 hours per week
Shortened Working Week	Common in sectors involving dangerous or hazardous conditions; typically 6–7 hours/day
Flexible Arrangements	Allowed if agreed upon in employment contracts, ensuring total hours don’t exceed weekly or monthly caps

Note: A Monday to Friday workweek is not mandated by law, but it is recommended when practical because it promotes work-life balance and is standard procedure.

Overtime Pay Regulations

Vietnam enforces strict regulations on overtime to protect employee welfare. The framework operates as follows:

Overtime Scenario	Overtime Rate (as % of Base Hourly Wage)
Weekdays (Normal Working Days)	150%
Weekends (Saturday/Sunday)	200%
Public Holidays or Paid Leave Days	300%
Night Shift Overtime (any day)	An additional 20% on top of the applicable rate

1. Daily cap: Overtime must not exceed 12 hours/day

2. Monthly cap: Overtime must not exceed 40 hours/month

3. Annual cap: Overtime must not exceed 300 hours/year for most sectors (expanded from 200 hours under recent law)

Employer Compliance: Key Requirements in Vietnam

1. Clearly define employment terms

All contracts must include working hours, rest periods, and overtime terms in writing.

2. Maintain accurate timekeeping records

Employers must track daily attendance, working hours, and all overtime performed.

3. Obtain written consent for overtime

Overtime requires the employee’s written consent, unless it’s an emergency.

4. Mandatory rest periods

Workers must receive at least one full 24-hour break every 7 consecutive working days.

5. Breaks during long shifts

Employees working 6+ continuous hours must get a minimum 30-minute break.

6. Health & safety precautions

Employers must conduct health and safety checks before assigning overtime in hazardous work conditions.

Penalties for Non-Compliance

Non-compliance with regulations on working hours and overtime may lead to:

1. Administrative fines ranging from VND 2 million to 75 million (approx. USD 80–3,000)

2. Temporary suspension of business operations in severe cases

3. Mandatory back payment of underpaid wages with interest

Strategic Insight for Employers

For organisations managing teams in Vietnam—particularly those with shift-based operations or expanding workforces—several practical measures can enhance payroll accuracy and compliance:

1. Implement automated payroll and attendance systems to minimise manual errors.

2. Ensure employment contracts are updated in line with the latest legal requirements.

3. Provide regular compliance training for HR personnel and line managers.

4. Engage local payroll or HR specialists to navigate regulatory obligations more effectively.

What Are the Employee Deductions and Employer Contributions in Vietnam?

Under the Labour Code and social insurance regulations, both employer and employee salary deductions must be taken into account when managing payroll in Vietnam. These deductions apply universally, irrespective of industry or company size.

Employee Salary Deductions:

Employees in Vietnam typically see deductions for three main types of compulsory insurance:

1. Social Insurance (SI): 8%

2. Health Insurance (HI): 1.5%

3. Unemployment Insurance (UI): 1%

These are deducted directly from the employee’s gross monthly salary.

Employer Contributions:

In addition to employee deductions, employers are legally required to contribute a larger share toward the same insurance categories, along with other funds:

1. Social Insurance: 17.5%

2. Health Insurance: 3%

3. Unemployment Insurance: 1%

4. Occupational Accident and Disease Fund: 0.5%

5. Trade Union Fee (if applicable): 2% (based on company policy or union presence)

Altogether, this brings the total employer contribution to approximately 22% of each employee’s salary.

Important Note on Salary Basis

While the government sets clear caps, contribution amounts are determined by an employee’s monthly salary. Social and health insurance contributions are capped at 20 times the basic salary, whereas unemployment insurance is calculated up to 20 times the regional minimum wage. These limits ensure the system remains fair and manageable for both employers and employees.

Key Insight

Maintaining payroll compliance in Vietnam requires close attention to changes in wage levels, contribution ceilings, and insurance regulations, many of which are subject to annual revision. Accurate calculations and timely submissions are essential to avoid penalties.

For organisations with expanding teams or cross-border operations, engaging professional payroll services in Vietnam can streamline compliance, reporting, and overall workforce management.

How Are Payroll Reports, Tax Filings, and Final Settlements Handled in Vietnam?

Processing monthly salaries is only one element of payroll management in Vietnam. Employers must also comply with government requirements relating to taxation, payroll reporting, and employee terminations. The key obligations are summarised below:

1. Monthly Payroll Reports

Companies prepare detailed monthly reports showing employee earnings, deductions (like tax and insurance), and net salaries.
These records should be accurate and well-maintained, as local authorities may request them during audits.

2. Filing Personal Income Tax (PIT)

Employers are responsible for declaring and paying PIT on behalf of employees.
Filing frequency, whether monthly or quarterly, depends on the size of the business.
At the same time, employers must submit social, health, and unemployment insurance contributions.

3. Year-End Tax Finalisation

At the close of each financial year, a reconciliation process ensures the correct amount of tax has been paid.
Employers submit a final PIT report and issue a form to employees for personal tax records or refunds.

4. Final Settlements When Employees Leave

Businesses must calculate and disburse outstanding amounts such as unpaid salary, bonuses, or leave encashments.
PIT is finalised, and social insurance records are updated or closed.
This process is generally completed within 7 working days from the employee’s last day.

5. Staying Updated

Vietnam’s payroll regulations are revised frequently.
Many businesses choose to work with payroll service providers to ensure ongoing compliance and reduce administrative risk.

What Happens to Payroll During Termination and Final Settlement?

In Vietnam, employers are required by the Labour Code to complete all payroll settlements within 14 working days of an employee’s final day of service. This obligation applies irrespective of the reason for separation—whether resignation, termination, or contract expiry—and ensures fairness and transparency in the termination process.

The final payroll generally includes:

1. Unpaid salary for the days worked up to the departure date

2. Payment for unused annual leave, based on the remaining balance

3. Severance pay, if the employee has completed at least 12 months of service and the termination was not due to misconduct

4. Any pending bonuses or allowances that were contractually agreed upon

5. Statutory deductions, including personal income tax and social insurance contributions

Employers must ensure that all documentation is completed correctly, records are accurate, and the final payment is clearly communicated to the departing employee. Effective management of termination settlements not only upholds legal compliance but also reflects respect for the individual and helps protect the organisation’s reputation.

What are the Best Practices for Compliance and Accuracy for Payroll Services in Vietnam?

Payroll in Vietnam extends beyond salary disbursement; it demands strict adherence to legal and regulatory requirements to maintain smooth business operations. Key practices include:

1. Monitoring updates to wage, tax, and insurance regulations

2. Selecting an appropriate payroll system, whether in-house or outsourced

3. Maintaining organised documentation of contracts, salaries, and tax filings

4. Meeting all tax and insurance deadlines to avoid penalties

5. Centralising employee data for efficient management of leave, bonuses, and deductions

6. Processing final settlements for departing employees within seven working days

7. Engaging local payroll experts to navigate Vietnam’s complex requirements and maintain compliance.

Also Read : Payroll Outsourcing: A Cost-Effective Solution For Employers

conclusion

Managing payroll in Vietnam goes beyond calculations; it requires close attention to contribution ceilings, reporting obligations, and labour law compliance. These responsibilities not only safeguard legal conformity but also shape the employee experience and support smooth business operations.

As organisations expand in Vietnam, sustaining payroll compliance becomes increasingly important. It mitigates legal risks, strengthens employee trust, and underpins long-term stability. However, keeping pace with evolving regulations and local requirements can be complex without specialist support.

Galaxy Group offers practical, on-the-ground expertise to simplify payroll management. From initial setup through to business expansion, our team ensures compliance remains aligned with organisational objectives—enabling companies to concentrate on growth and people, while we manage the complexities behind the scenes.

Stay Compliant with Vietnam’s Payroll Regulations

Get insights on Vietnam’s 2025 payroll laws, wage updates, and compliance essentials to stay on track.

FAQ’S

What is the payroll system in Vietnam?

The payroll system in Vietnam handles social insurance contributions, tax deductions, and salary computation. Employers must follow laws pertaining to minimum wages and reporting deadlines. To effectively manage compliance, many businesses use local payroll services.

How do salaries work in Vietnam?

In Vietnam, salaries are typically paid on a monthly basis and are subject to the government-mandated minimum wage. Additionally, employers manage unemployment insurance, social insurance, health insurance, and personal income tax deductions. The majority of companies adhere to a defined framework to guarantee that workers are paid on time and in compliance.

Is 13th-month pay mandatory in Vietnam?

No, the law in Vietnam does not require 13th-month pay. Nonetheless, it is a typical custom, particularly during Tết, the Lunar New Year. Numerous employers provide it as a bonus in accordance with employee contributions or business performance, or as stipulated in employment contracts or internal policies. It becomes a legally binding obligation if it is expressly mentioned in the contract or company policies.

Do foreign companies need to set up a local entity to run payroll in Vietnam?

Not always. Establishing a complete legal entity can seem like a big step if you’re just getting started or testing the waters. For this reason, many businesses choose to partner with an Employer of Record (EOR) or a local payroll provider. It’s a sensible approach to maintain compliance and appropriately compensate your staff without becoming bogged down in time-consuming paperwork and registrations.

What are the standard working hours in Vietnam?

The standard workweek is 48 hours, typically spread across six days. Overtime is allowed but must follow labour law guidelines.

Comprehensive Checklist on Employment in Taiwan

August 26, 2025 by digitalgowhere

August 26, 2025

Comprehensive Checklist on Employment in Taiwan

Taiwan has rapidly emerged as a key business hub in the Asia-Pacific, offering a skilled workforce, strong infrastructure, and a business-friendly environment. For employers and HR professionals looking to expand into Taiwan, understanding the local employment landscape is a strategic advantage and a legal necessity.

Hiring employees in Taiwan requires compliance with local labour laws, awareness of cultural norms, and the ability to manage contracts, benefits, and payroll accurately.
To simplify this process, this blog presents a comprehensive, step-by-step checklist covering everything from drafting compliant employment contracts to managing tax, overtime, and foreign hires.

Table Of Content

How Can Employers Successfully and Legally Hire Employees in Taiwan?

Here are the 11 essential steps every employer must follow to stay compliant with local labour laws, manage payroll accurately, and onboard talent effectively, whether you’re hiring local staff or foreign professionals. Use this checklist to build a legally sound and efficient hiring process in Taiwan.

1. Understand the Key Labour Laws in Taiwan

Understanding the labour law in Taiwan is the first step toward establishing compliant employment practices. Before hiring, employers must familiarise themselves with the two key statutes governing employment in Taiwan:

Labour Standards Act (LSA)

Regulates working conditions, wage levels, leave policies, and termination procedures.
Sets working hour limits and mandates rest periods.
Requires issuance of payslips and retention of employment records for at least five years (non-compliance can attract fines up to NTD 300,000).

Employment Service Act

Governs the employment of foreign nationals.
Promotes fair hiring practices and prevents discrimination.
Requires employers to provide equal opportunities.

Key Employer Obligations:

Contracts must comply with statutory terms.
Register new hires for labour insurance, health insurance, and pension within 3 days.
Ensure non-discriminatory hiring and workplace practices.

2. Meet the Legal Requirements to Hire Foreign Employees

Hiring international talent in Taiwan can enhance innovation and global reach, but it must be handled in strict accordance with national laws.

To hire foreign employees in Taiwan, employers must:

Obtain a work permit from the Ministry of Labour before the employee begins work.
Assist the employee in applying for an Alien Resident Certificate (ARC) for legal residency and employment.
Ensure the position qualifies under Taiwan’s approved job categories (e.g., tech, education, management roles).

Permits are typically valid for 1–3 years and are renewable. Work without proper authorisation is illegal and may result in fines or deportation.

Employer Responsibilities

Provide a valid employment contract in Taiwan, outlining job duties, compensation, and benefits.
Ensure that foreign hires are registered for labour insurance, health insurance, and pension plans.
Offer bilingual contracts (Mandarin + English) to avoid miscommunication and protect legal interests.
Assist with onboarding and cultural orientation to support smooth integration.

Employers must manage several levels of compliance when onboarding foreign workers. Our foreign hiring guide provides detailed information on the necessary documentation and best practices.

3. Follow a Step-by-Step Hiring Process

Successfully hiring employees in Taiwan requires a structured approach that complies with local labour laws and cultural expectations. Employers must follow a clear path, from posting vacancies to onboarding, while maintaining full regulatory compliance

Job Posting & Recruitment

Publish compliant, non-discriminatory job ads (in Mandarin and/or English).

↓

Candidate Screening & Interviewing

Conduct interviews, ensuring fairness and adherence to anti-discrimination laws.

↓

Offer Letter & Employment Contract

Provide a written employment contract in Taiwan outlining key terms.

↓

Labour & Insurance Registration

↓

Formal Onboarding

Introduce company policies, team structure, and work culture, and set performance expectations.

4. Draft a Legal Employment Contract in Taiwan

A valid employment contract in Taiwan may be written or oral; however, written agreements are strongly recommended. The law mandates that contracts include:

Job title & scope of work
Working hours, rest days, and overtime terms
Salary, payment frequency, and method
Leave entitlements (annual, sick, maternity, etc.)
Termination conditions and severance policies
Contributions to social security schemes

For foreign hires, bilingual contracts (Mandarin and English) are strongly encouraged. Contracts should also include a reference to compliance with labour insurance, health insurance, and pension contributions as part of onboarding obligations. This clarity ensures both legal protection and operational transparency for all parties involved.

Did You Know?

Under Taiwan’s Labour Standards Act, employers are required to issue pay slips and retain employment records for at least five years; failure to comply may result in fines of up to NTD 300,000.

Taiwan’s labour laws require specific clauses within employment agreements. To understand how these local requirements fit into global standards, refer to our international contracting guide.

5. Comply with Taiwan’s Minimum Wage Requirements

Employers must comply with Taiwan’s minimum wage laws for both full-time and part-time employees. 1. As of 2025, the minimum wage rates are:

NTD 28,590 per month (≈ USD 893.44)
NTD 190 per hour (≈ USD 5.94)

2. These wage rates are reviewed annually by the Ministry of Labour to reflect inflation and economic changes. 3. Employers are responsible for paying wages at or above the legal minimum, ensuring that bonuses, overtime pay, and allowances are provided in addition to base salary, and maintaining accurate payroll records to demonstrate compliance with Taiwan’s labour laws. 4. Non-compliance with Taiwan’s minimum wage laws can result in serious consequences, including financial penalties, employee back pay claims, and reputational damage. Ensuring timely and accurate wage practices is essential for maintaining legal and professional credibility.

6. Set Up a Legally Compliant Payroll System

A structured approach to payroll is crucial for employers looking to operate compliantly in Taiwan. Below is a breakdown of key requirements:

1. Pay cycle

Most companies follow a monthly payroll system, typically disbursing salaries at the end of each month.

2. Payslip requirement

Employers must issue detailed payslips that show the gross salary, deductions, and net pay.

3. Payroll components

Base salary, overtime pay, bonuses (e.g., 13th-month salary), meal/transport allowances, and insurance contributions.

4. Labour insurance, health insurance, and pension
Mandatory deductions from both employer and employee; employers must register new hires within three days.

7. Follow Working Hour Regulations and Overtime Pay

1. Taiwan’s standard work schedule, which is intended to safeguard the welfare of its employees, is limited to 8 hours per day and 40 hours per week. 2. Overtime is limited to 46 hours per month and must be done with employee consent. 3. Overtime must be fairly compensated:

1.34× the hourly wage for the first two extra hours
1.67× times the hourly wage for any additional hours

4. At least one rest day per week is mandatory by law, no exceptions. 5. If employees work on public holidays or scheduled rest days, employers must provide additional pay or compensatory leave.

8. Provide Mandatory Employee Leave & Benefits

Offering the right mix of leave and benefits is essential for compliance and employee satisfaction in Taiwan. Under the labour law in Taiwan, employers must provide a set of statutory entitlements:

Annual leave: Starts at 3 days for service exceeding 6 months but less than 1 year and increases to 7 days after one year of service, which continues to increase with tenure.
Sick leave: Up to 30 days per year at half pay.
Paid maternity leave of 8 weeks.
Paternity leave: 5 days, fully paid.
Public holidays: Around 12 national holidays annually.

Many companies enhance their packages with additional benefits such as

A 13th-month salary or performance bonus
Meal and transport allowances
Supplemental insurance and wellness support
Contributions to the Labour Pension Fund

These offerings not only fulfil legal requirements but also help attract and retain skilled professionals in a competitive hiring market.

9. Understand and Fulfil Taxation Obligations

Understanding taxation is essential for payroll compliance. Employers must manage income tax withholding and contribute to the country’s social security schemes in line with regulatory requirements.

Income tax:

Progressive rates range from 5% to 40%, depending on the annual income bracket.

Withholding tax:

Employers must withhold income tax at the source and remit it to the National Taxation Bureau.

Social Security contributions:

Employers contribute to labour insurance, national health insurance, and the Labour Pension Fund, and employees contribute a smaller share through automatic payroll deductions.

10. Comply with Overtime and Termination Rules

In Taiwan, overtime and termination are tightly regulated under the Labour Standards Act. Employees may work overtime only with consent, and it must not exceed 46 hours per month. Compensation is legally mandated.

Dismissals must be lawful and justified. Employers must: Give 3 to 30 days’ notice (or pay in lieu)
Provide a written explanation.
Pay severance, typically half a month’s salary per year of service

Improper termination can result in fines, reinstatement, or compensation.

Quick-Reference Hiring Checklist for Employers to Hire in Taiwan

Stay compliant with Taiwan’s employment laws using this quick-reference checklist:

Item	Status
Understand the labour laws in Taiwan
Meet the Legal Requirements to Hire Foreign Employees
Draft a legal employment contract in Taiwan
Comply with Taiwan’s Minimum Wage Requirements
Ensure the correct payroll setup in Taiwan
Follow the legal working hour limits in Taiwan
Register for health, labour, and pension contributions
Provide leave and benefits in accordance with the law
Fulfil the tax obligations
Manage termination and severance correctly

Conclusion

Navigating employment in Taiwan demands not only an understanding of the local market but also a precise grasp of legal, tax, and procedural requirements. From defining the minimum wage in Taiwan to crafting a compliant employment contract in Taiwan, every step matters, especially when expanding operations or onboarding foreign talent.

At Galaxy Group, we believe in simplifying complexity. This checklist serves as a practical tool to help HR teams, global employers, and decision-makers establish compliant, efficient hiring practices in Taiwan.

Expand Your Team with Global Talent

Ensure compliance with Taiwan’s laws when onboarding international professionals.

FAQ’S

How is payroll managed in Taiwan?

Payroll in Taiwan is typically processed on a monthly basis, with employers responsible for deducting and remitting taxes, labour insurance, health insurance, and pension contributions. Payslips must be provided.

How can I hire employees in Taiwan as a foreign company?

To hire employees in Taiwan, foreign companies must comply with local employment laws, draft legally sound contracts, register with tax and social insurance authorities, and—if hiring foreign talent—secure valid work permits and ARCs.

What are the taxation requirements for employers in Taiwan?

Taxation in Taiwan requires employers to withhold progressive income tax (ranging from 5% to 40%) and make contributions to national health insurance, labour insurance, and the Labour Pension Fund. Errors or delays may result in penalties.

What should be included in a Taiwan employment contract?

A valid employment contract in Taiwan must include job role, salary, working hours, leave, insurance, and termination terms. Bilingual agreements are recommended for foreign hires.

What are the working hour limits in Taiwan?

The working hour limits in Taiwan are 8 hours per day, 40 hours per week, with a cap of 46 overtime hours per month, paid at premium rates.

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Guide to Payroll in Taiwan

Table Of Content

How Does Taiwan Payroll Strengthen Global Competitiveness?

1. Attracting and Retaining Top Talent

2. Ensuring Full Compliance

3. Enabling Rapid Market Scaling

What Are the Key Trends and Compliance Rules for the Remote Workforce in Taiwan?

Local Expertise

Scalability

Technology Integration

Multilingual & Regional Support

What Is the Average Salary in Taiwan?

Key Takeaways for Employers and Employees

Salary Range:

Total Rewards Matter:

Market Awareness:

Sector Variations:

Strategic Alignment:

Compliance:

What Is Minimum Wage in Taiwan, and What Does It Mean for Employers?

What Employers Should Keep in Mind

Staying Compliant

Managing Labour Costs

Supporting Retention and Hiring

Getting Payroll Right

Planning Ahead

Basics of Employment Contracts in Taiwan

Key elements typically included in a Taiwan employment contract:

How Payroll in Taiwan Works: Taxes, Social Security, and Processes

Key Considerations When Choosing a Payroll Partner in Taiwan

Conclusion: Building a Scalable and Compliant Payroll Strategy in Taiwan

Stay Compliant with Taiwan’s Payroll Regulations

FAQ’S

Managing Payroll in Japan

Table Of Content

What Are the Key Components and Legal Requirements of Japan Payroll?

Key Components of Payroll in Japan :

2. Working Hours and Overtime Pay

3. Bonuses

4. Deductions and Contributions

5. Payslips and Payroll Reports

Legal Responsibilities Every Employer Must Fulfil

1. Enrolling Employees in Social Insurance

3. Staying Compliant with Labour Laws

4. Making Year-End Tax Adjustments (Nenmatsu Chosei)

Choosing the Right Payroll Company in Japan: Local, Global or Regional

Japan Employment Laws That Impact Payroll Operations

Labour Standards Act (LSA)

Minimum Wage Law

Social Insurance Laws

Income Tax Withholding

Equal Pay for Equal Work

Working Hours and Overtime Regulations

Paid Leave Entitlements

Termination and Severance Guidelines

Minimum Wage and Average Salary Trends in Japan

Key Takeaways for Payroll Planning

1. Wages are Rising

2. Location makes a Difference

3. Look at the Median, not just the Average

4. Plan for all types of hires

Is Payroll Outsourcing in Japan the Right Move for a Business?

Payroll Dynamics in Japan: What’s Changing and Why It Matters

Automation of Payroll Processes

Shift to Digital Payment Methods

Flexible Compensation Models

Enhanced Focus on Compliance and Risk Management

Integration with Global Payroll Systems

How Can You Manage Payroll Across Borders While Staying Compliant in Japan?

1. Build a Consistent Payroll Framework