For profit-seeking enterprises settling the Labor Retirement Reserve Fund, the remaining funds should be reported as other income
National Taxation Bureau of the Northern Area (NTBNA), Ministry of Finance, stated that, for profit-seeking enterprises which have been dissolved or have no employees who have paid pensions under the Labor Standards Act, upon settling the Labor Retirement Reserve Fund, the remaining funds received should be reported as other income of the current year.
The Bureau further stated that the Labor Retirement Reserve Fund provided by profit-seeking enterprises in accordance with Paragraph 1, Article 56 of the Labor Standards Act have been disbursed as expenses in the year of allocation. After severance, if there is no need to pay according to the law or the employees no longer apply to the same retirement system according to said law, when the profit-seeking enterprises settles the Labor Retirement Reserve Fund, the remaining surplus, if any, should be transferred back as other income of the year.
The Bureau provides the following example: When checking Company A’s case of profit-seeking enterprise income tax settlement and declaration case for the year 2019, it was found that the company had settled its Labor Retirement Reserve Fund with the competent authority in the year and received the remaining amount of more than NT$900,000, but the company failed to declare the remaining amount. Thus, it was taxed and fined in accordance with Article 110 of the Income Tax Act.
The Bureau would like to remind profit-seeking enterprises that, when settling the Labor Retirement Reserve Fund and claiming back the remaining funds, to remember to report other income for the year to avoid under-declaring or omitting declaration. If you have any questions, please visit the website of NTBNA at http://www.ntbna.gov.tw/ or call the toll-free number 0800-000321 for more information on the relevant aspects of the subject. The Bureau is pleased to provide further consultation services of your inquiry.
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=b180240216be4d5bb44fb7d10604c88a