Indirect tax snapshot
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The main indirect tax in Taiwan is value added tax (VAT).
Article 1, of Value Added and Non-Value Added Tax law states ‘Business tax, in the form of value-added or non-value-added, shall be levied in accordance with this Law on the sale of goods or services within the territory of the Republic of China (ROC) and the import of goods’.
Based on the above, VAT is charged on taxable supplies that take place in Republic of China (Taiwan). The fact that one party to the transaction may not be located in Taiwan is not relevant.
VAT registrants collect the VAT from counter parties to the transactions and pass on the tax to the government via VAT filings as required by local law.
Once an application has been approved for the set-up of a business entity, registrar of a company will automatically pass on related information to tax office for VAT registration. The tax office will notify responsible person of the profit seeking enterprise to report to tax office to purchase the first set of Government Unified Invoice (GUI) books.
District VAT officers on regular basis will also visit registered business entities in the district. If a business entity appears to be non-existing or non-trading, tax officer may at his or her discretion suspend an entity’s right to purchase GUI invoice books.
Through control over the serial numbers on GUI, the government can track invoices issued by one business to another. Through cross checking VAT filings to income tax returns, it is difficult for businesses in Taiwan to under-report income.
Yes. VAT registration is needed if monthly turnover of taxable transactions in Taiwan exceeds NT$ 80,000 for selling goods or NT$ 40,000 for providing services. Failure to register for VAT is subject to a fine of NT$3,000 ~ NT$30,000.
Effective from 1 May 2017, foreign e-commerce operators having no fixed place of business in Taiwan but who provide services to individuals in Taiwan via the internet must register for VAT if their annual Taiwan sales exceed TWD 480,000 (Approximately USD 15,500).
Yes, the non-established business entity needs to appoint a business agent to register for VAT in Taiwan. If such person is not appointed, the following people could be deemed to be the tax agent for the business entity:
- where the agent, in addition to representing its principal in the purchase of goods, is authorised to regularly represent the principal in making business arrangements and in signing contracts
- where the agent regularly keeps in store goods of its principal and delivers the same, for its principal, to others
- where the agent regularly accepts, for its principal, orders of goods.
A VAT filing must be filed at least once every two month and is due on the 15th day following the end of the period. Zero rated taxpayer may apply to file VAT on a monthly basis.
Where the VAT refund is needed, the government will give priority assessment if the VAT filing has been audited by a CPA firm.
Both late returns and late payment of tax are subject to penalties.
In the event that a business entity fails to file the sales amount or a detailed list of uniform invoices used within the time limit, the business entity shall be liable to a surcharge for late filing or non-filing:
- if the filing is less than 30 days past due, the surcharge shall be equivalent to 1% of the tax payable for every two days overdue. The administrative fine shall not be less than NT$1,200 or more than NT$12,000
- if the filing is in excess of 30 days past due, the business entity shall be liable to a non-filing surcharge equivalent to 30% of the tax payable, as determined by the competent tax authority. The amount of this surcharge shall not be less than NT$3,000 or more than NT$30,000
- where there is no tax payable, the surcharge for belated filing or non-filing shall be NT$1,200 and NT$3,000 respectively.
A taxpayer, failing to pay any tax or surcharge for late filing or non-filing within the specified time limit:
- if the payment made less than 30 days past due, it shall be subject to a 1% surcharge on late payment for every two days in arrears, starting from the day immediately following the date the time limit expires
- if the payment is late thirty days after the time limit, the taxpayer shall be pursued for payment of taxes owed and be fined no more than five times the amount of tax evaded, and the operation of the taxpayer’s business may be suspended by the competent tax authority.
Furthermore, any amount of the above tax or surcharges shall be subject to interest charge calculated on a daily basis at the local bank’s prevailing rate of one-year term time deposit.
Failure to register for VAT or failure to issue Government Unified Invoices in correct manner can also be subject to penalties.
In general, no.
A GUI (VAT invoice) must show:
- an GUI number which is unique and sequential which is pre- printed on invoice book purchased from the government
- the purchaser’s registered name
- the purchaser’s GUI number
- the invoice date
- the customer’s name and GUI number
- an item description sufficient to identify the goods or services supplied
- the quantity of goods or the extent of the services
- the unit price excluding VAT
- item subtotal
- the rate of VAT that applies to what’s being sold
- the amount of VAT charged expressed in new Taiwan dollar
- the grand total of the transaction.
The GUI number is generally viewed as the identity number of a business entity in Taiwan.
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