As global industries undergo rapid change and transformation, SMEs face growing demand for diverse talent, a challenge compounded by Taiwan's declining birthrate and aging population. In response, Article 36-2 of the Act for Development of Small and Medium Enterprises was amended in 2024 to expand the tax benefits available to SMEs that hire two or more additional entry-level employees who are citizens aged either 24 or younger, or 65 or older. This measure is intended to encourage SMEs to continue recruiting young people while also supporting the re-entry of senior talent into the workforce. More broadly, the tax benefit mechanism aims to incentivize SMEs to build stronger workforces and contribute to overall employment growth.
SMEs that meet these criteria may claim a deduction equivalent to 200% of qualifying salary expenses from their taxable income when filing their profit-seeking enterprise income tax return this May with the local tax bureau having jurisdiction over their location. The benefit applies to any full-time entry-level employee with an average monthly salary below NT$63,000, or any part-time entry-level employee with a daily wage below NT$3,152 or an hourly wage below NT$394 in 2025. For example, if an SME incurs NT$1 million in additional salary expenses from hiring qualifying employees, it may claim a NT$2 million deduction on its tax return, effectively reducing its taxable income and, consequently, its income tax liability.
This measure represents a meaningful commitment by the government to share in the staffing cost pressures faced by SMEs, providing greater financial flexibility and incentive to companies seeking to expand their workforces, nurture young talent, or bring older workers back into employment. Temporary staffing and dispatch service providers are also eligible for the benefit, encouraging these businesses to take on additional entry-level personnel, strengthen labor supply across industries, and create more employment opportunities.