Taiwan’s Ministry of Finance allows SMEs hiring young or senior employees and increasing salaries to claim enhanced tax deductions of up to 100% for new hires and 75% for salary increases, subject to application rules and legal compliance.
Taiwan’s Central District National Taxation Bureau of the Ministry of Finance announced that, effective 1 January 2024, small and medium-sized enterprises (SMEs) that hire at least two additional domestic grassroots employees aged 24 or below, or 65 or above, and simultaneously increase their overall salary expenditures, may deduct 100% of the additional salary expenses for such employees from taxable income.
Furthermore, for increases in the average salary of existing domestic grassroots employees, any recurring salary expenses not resulting from adjustments to the statutory minimum wage may be deducted at 75% from taxable income.
The Bureau further explained that SMEs applying for the above enhanced deductions must, at the time of filing their annual income tax return, complete the required forms and attach supporting documentation. These must be submitted to the local tax authority for approval of the deductible amount.
Applications not submitted within the statutory filing deadline will not qualify for the enhanced salary expense deductions.
The Bureau emphasised the following restrictions on applications for this tax incentive:
- No double benefits: Salary expenses claimed for enhanced deductions must first be reduced by any government subsidies. In addition, if salary expenses have already been applied under the tax incentive for hiring additional employees or other tax relief measures, they cannot also be applied under the salary increase incentive.
- Serious legal violations disqualify applicants: SMEs that, within the past three years, have committed serious violations of environmental protection, labour, or food safety and hygiene laws, as determined by the competent central authority, are not eligible to apply for this tax incentive.
This announcement was made on 11 March 2026.
