Customs duty is imposed under the Customs Law and Customs Import Tariff promulgated by the MOF. Basically, the Taiwan customs mechanism, including valuation and classification, follows WTO rules and the WCO's Harmonized Commodity Description and Coding System (HS). Please see https://web.customs.gov.tw/en/ for more information on Customs Import Tariff and Interpreted Customs Import Tariff.
Advance Classification Application
A duty payer can apply to customs for advance confirmation of the applicable tariff classification of importing goods. An applicant may receive responses from the customs office within 30 days after the application, and expects to receive a reply within 120 days if the case requires the advice of local or international institutions or professionals.
Advance Ruling Application
Before importation, the duty payer or its delegated person can submit an advance ruling request to predetermine the customs value of its imported goods with the customs. Generally, the applicant can expect to receive responses from the customs within 45 days after submission of the application; if the application requires the opinions from local or international institutions or professionals, the reply is expected to receive within 90 days after submission of the application.
Post-Clearance Audit
Customs can proceed with a post-clearance audit of duty-payers, exporters and related persons after notifying taxpayers, exporters or related parties within six months and within two years from the date following the release of the imports and/or exports. Depending on the post-clearance audit result, any duty refundable or receivable must be paid within three years from the date following the release date.
Duty-Paying Value
Customs duty is imposed mainly on price basis, and also on quantity basis or compositive basis as ancillary basis. Valuation of customs duty on price basis is mainly based on transaction price. Transaction price refers to transaction price actually paid or payable by the buyer, plus the following if the following is not included in the price actually paid or payable:
- Commissions, brokerage, the cost of containers and the cost of packing incurred by the buyer;
- The value, apportioned as appropriate, of the following goods and services supplied by the buyer to the seller free of charge or at reduced cost for use in connection with the production or sale for export of the imported goods:
- Materials, components, parts and similar items incorporated in the imported goods;
- Tools, dies, moulds, and similar items used in the production of the imported goods;
- Materials consumed in the production of the imported goods; and
- Engineering, development, artwork, design, plans and similar items undertaken elsewhere than in this country and necessary for the production of the imported goods;
- The royalties and license fees related to the goods paid by the buyer as a condition of the sale of the goods;
- The proceeds for use or disposal of the goods by the buyer accrues to the seller;
- The transport cost of the imported goods to the port or place of importation, and loading, unloading and handling charges associated with the transport; and
- The cost of insurance.
Related Party Transactions
Where the transaction price of a related party transaction is affected by the relationship of the parties, the customs authorities may disregard the transaction price and assess the duty-paying value of the import goods by applying the following methods:
- Comparable price method: The customs value shall be determined by Customs based upon the transaction value of identical goods sold for export to the Taiwan, exported at or about the same time as the goods being valued. In applying this method, a reasonable adjustment shall be made to take into account differences in value attributable to commercial levels, quantity, transport costs, etc.
- The deductive value method: the deductive value method means that the customs value shall be based on the unit price at which the imported goods or identical or similar imported goods, are sold in Taiwan in the condition as imported, in the greatest aggregate quantity, at or about the time of the importation of the goods being valued, to persons who are not related to the persons from whom they buy such goods at the first commercial level, subject to deductions for the following:
- Either the commissions usually paid or agreed to be paid, or the additions usually made for profit and general expenses in connection with the sale of the imported goods or imported goods of the same class or kind in Taiwan;
- The customs duties, and other national taxes payable in Taiwan by reason of importation and sale of the goods;
- The transport and insurance costs and associated costs incurred within Taiwan after the importation of the goods.
- The computed value method: The computed value means the sum up of following:
- The costs and expenses of producing the imported goods;
- An amount for profit and general expenses equal to that usually reflected in the sale of the imported goods or imported goods of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to Taiwan;
- The transport cost of the imported goods to the port or place of importation, loading, unloading and handling charges and insurance costs associated with the transport.
- Other reasonable methods: Best information available to the authorities if the duty-paying value cannot be assessed by applying any of the above methods.
Imported goods which are imported in different packs
Where a complete set of machinery, together with all essential equipment used directly with the machinery in the production process, must be imported in an unassembled or disassembled state, packed separately due to excessive size or for other reasons, unless advanced application is made and through the customs' assessment, the machinery and equipment will be subject to custom duties based on the complete set of machinery, and will be assessed according to the relevant tariff classification.
Reimport goods which are exported for repairing and assembling
Customs duty is imposed on goods at the time of import. However, where goods are exported from Taiwan for the purpose of repairing, assembling or processing, the customs duty is assessed as follows:
- For goods exported for repairing or assembling, customs duty is assessed based on the repair or assembling expenses.
- If goods are exported for further processing, when the completed goods are re-imported, customs duty may be paid only on the value-added part of the goods, which represents the difference between the value of the goods at the time of export and the value of the goods as assessed by customs at the time of re-import.
Leased Equipment
Goods imported under a lease transaction may be subject to customs duty based on the rental or use charges plus movement costs, such as freight and insurance costs from the exporting port to the import port.
If the rental or use charge is determined by customs as lower than normal, customs can assess the rental or use charge based on its investigation. The assessed rental or use charge may not be lower than 10% of the full value of the imported goods as assessed by customs.
Duty Exemption
An exemption may be available in the following situations:
- Exempt under Customs Law: The Customs Law provides a duty exemption privilege for certain goods, such as experimental equipment and other necessities imported by educational and research institutions for the use of education, research and experimentation. In addition, Customs Law also provides various situations in which customs duty is exempt. For example, based on the prior approval of customs, certain goods may be exempt from customs duty if they are re-exported within six months (or a longer period granted by the MOF). Such goods include dutiable samples; goods used for scientific research, testing, inspection, or exhibition; equipment and tools used for installation or repair of machinery; containers; goods imported for repair and maintenance; or other goods approved by the MOF.
- Exemption according to Additional Notes of Customs Import Tariff: Article 3 of General Provisions of the Customs Import Tariff provides that "items which are in the scope of "imposing the tax with conditions", "tax reduction" or "tax exemption", of which the conditions would be set out in the Additional Notes of each Chapter, such as:
- Chapter 84: Nuclear reactors, boilers, machinery and mechanical appliances and parts and supplies required for exploring and drilling oil (gas) wells; machinery and equipment imported for the prevention of air pollution, water contamination, noise or vibrations or for environmental inspection and testing or waste disposal; parts and accessories required for making agricultural and horticultural machinery for soil preparation or cultivation; articles used solely for the blind; parts and equipment used to improve production efficiency or reduce energy consumption; and equipment used solely for experimentation.
- Chapter 85: Electrical equipment; equipment imported for miner-safety use; machinery, equipment and instruments for the prevention of air pollution; equipment solely for making video media; and instruments for research and experimentation.
- Chapter 87: Vehicles other than railway or tramway rolling-stock; parts and accessories for fire engines and fire escapes and assembly; parts required for making tractors combining with agricultural implements; and raw materials and noise test lorries for the prevention of air pollution.
- Chapter 88: Aircraft, spacecraft and supplies required for the repair and building of flying machines.
- Chapter 89: Ships, boats and floating structures and supplies necessary for the repair and construction of vessels, supplies required for the repair and maintenance of vessels engaged in international trade; duty-paid supplies and raw materials essentially for the manufacture of such supplies purchased locally by shipping companies; and duty-paid supplies purchased locally by shipyards and suppliers.
- Chapter 90: Optical, photographic, cinematographic, measuring, precision, medical and surgical instruments and apparatus; instruments and apparatus for prevention of air pollution, water contamination, noise or vibration: and instruments for research and experimentation for development of new products, quality upgrading, increase of production, achievement of energy conservation, promotion of recycling or improvement of production techniques.
- Other provisions provided by special laws which grant tax exemption benefits: such as the exemption on importation of goods and installation payment of customs duty provided by Statutes for Encouragement of Private Institutions Participating in Transportation and Communication Infrastructure Projects.