The Ministry of Finance says leftover Labour Retirement Reserve funds must be reported as income when settled.
Taiwan’s Ministry of Finance (MoF) has stated on 18 August 2025 that when a company is dissolved or has no employees eligible for pensions, any leftover funds in its Labor Retirement Reserve must be declared as “other income” when settled.
Beigang Office, National Taxation Bureau of the Central Area, Ministry of Finance, stated that the Labor Retirement Reserve Fund provided by profit-seeking enterprises in accordance with Paragraph 1, Article 56 of the Labor Standards Act is recorded as an expense in the year of allocation. Profit-seeking enterprises that have been dissolved or have no employees entitled to pensions under the Labor Standards Act should, upon settling the Labor Retirement Reserve Fund, report any remaining balance as other income in the year of settlement.
The Office provides the following example:
When reviewing the 2022 profit-seeking enterprise income tax return for Company A, it was discovered that the company had settled its Labor Retirement Reserve Fund with the competent authority and received a remaining balance of over TWD 300,000 for the year. However, the company failed to declare this remaining amount. As a result, it was subject to additional taxation and a fine in accordance with Article 110 of the Income Tax Act.
The Office reminds all profit-seeking enterprises that when they settle their Labor Retirement Reserve Fund and reclaim the remaining balance, they should declare such funds as other income for the relevant year to avoid underreporting or omission, which may lead to penalties.
