For profit-seeking enterprises settling the Labor Retirement Reserve Fund, the remaining funds should be reported as other income
Shalu office, National Taxation Burea of the Central Area, 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 office 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 office provides the following example: When checking Company A’s case of profit-seeking enterprise income tax settlement and declaration cases for the year 2020, 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$1,400,000, 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 office would like to remind profit-seeking enterprises that, when settling the Labor Retirement Reserve Fund and claiming back the remaining funds, to report other income for the year to avoid under-declaring or omissions.
If you have any questions, please make a free call at 0800-000321. We are pleased to be at your service.
Press released by Ms. Cun-Hui Lin, Profit-Seeking Enterprises Income Tax Section of Shalu Office.
Contact phone number: 04-26651351 ext 103.
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=9b736842e9c04642873e6926f7337845