Business tax (BT) is imposed under two systems: the VAT system and the Non-VAT system.
Pursuant to the Value-added and Non-value-added Business Tax Act (Business Tax Act orBTA), the sale of goods and the provision of services in Taiwan, as well as the import of goods into Taiwan, are subject to BT.
A sale of goods is defined as the transfer of goods to another entity for compensation in Taiwan. In addition, any of the following circumstances will be deemed a sale of goods for BT purposes:
A sale of services is the supply of services to others or the provision of goods for the use by others for consideration, with the exception of professional services offered by practitioners and services rendered by employees.
Any of the following circumstances is an import of goods:
The following are BT taxpayers:
Introduction of GUI
The government uniform invoice (GUI) is a standard VAT invoice. In Taiwan, a VAT-system business entity selling goods or services must issue a GUI to a purchaser at the time of sale, delivery, or receipt of payment, as the case may be. If the purchaser is a business entity, the business tax computed must be stated separately from the sales amount on the GUI. If the purchaser is not a business entity, the business tax does not need to be itemized on the GUI. The GUI issued by a Non-VAT business entity only has to state the sales amount.
Types of GUI
The types of GUI and their usage are as follows:
| Type of GUI | Usage |
|---|---|
| Triplicate GUI | A VAT-system business entity supplies goods or services to another business entity (usually business-to-business) in accordance with Section 1, Chapter 4 of the Business Tax Act |
| Duplicate GUI | A VAT-system business entity supplies goods or services to a non-business entity in accordance with Section1, Chapter 4 of the Business Tax Act |
| Cash Register GUI | A VAT-system business entity uses a cash register to record its sales of goods or services in accordance with Section 1, Chapter 4 of the Business Tax Act |
| Special GUI | A special business tax system business entity supplies goods or services to buyers in accordance with Section 2, Chapter 4 of the Business Tax Act |
| Electronic GUI | Pertain to the uniform invoice issued, transmitted or obtained via the internet or by other electronic means when business entities selling goods or services to a purchaser; there shall be the retention media file, the receipt media file and the certification media file. |
Note: Financial institutions, certain restaurants, small businesses, business entities operated and supplying services solely by persons with visual impairments engaging in massage in accordance with the laws, and other business entities which are excluded by the Ministry of Finance from reporting their transactions are subject to Non-VAT on the basis of their gross business receipts in accordance with Section 2, Chapter 4 of the Business Tax Act; other business entities are subject to VAT in accordance with Section 1, Chapter 4 of the Business Tax Act.
Except for entities subject to Non-VAT, all business entities fall within the scope of the VAT system. VAT is levied according to the value added to goods or services at each stage in the production and distribution chain (see below for a sample calculation of VAT).
The VAT rate is 5%.
The following sales of goods and provision of services are zero-rated:
"Bonded zone" means a technology industrial park, or an FTZ approved by the government, or a bonded factory, bonded warehouse, or logistics center administered by customs, or any other designated area approved for establishment by the competent authority in charge of the relevant industry and supervised by customs.
"Bonded zone business entity" is an enterprise inside a technology industrial park, a science park, an agricultural technology park, or an FTZ that has been approved by the government, and also means a bonded factory, bonded warehouse, or logistics center administered by customs, or an enterprise inside any other designated area approved for establishment by the competent authority in charge of the relevant industry and supervised by customs. "Taxable zone business entity" is a business entity other than a bonded zone business entity.
Foreign enterprises, institutions, organizations, or associations that do not have a fixed place of business in Taiwan and that purchase goods or services for exhibitions or temporary business activities within a period of one year and on which the VAT is more than NTD 5,000 may qualify for a VAT refund on the goods or services. (However, a refund will not be available where documentation relating to the goods or services purchased is not maintained or where the goods or services purchased are under NTD 5,000.)
The above institutions may qualify for a VAT refund, provided reciprocal treatment or an exemption from similar taxes is granted to the same institutions of Taiwan by the foreign country in which they are performing such activities.
The MOF has issued regulations on issues such as calculation of the one-year period, the scope of exhibitions or temporary business activities, documentation requirements, the period in which to request a refund, etc.
The relevant information can be browsed and downloaded at the special zone “Exhibitors’ VAT Refund System” of the eTax Portal on the MOF website (www.etax.nat.gov.tw).
The amount of overpaid VAT claimed by a business entity will be refunded after verification by the tax authorities when:
Overpaid VAT resulting from circumstances other than the above may be offset against future business tax payable. Business entities with special situations can request approval from the MOF to receive tax refunds.
Example: ABC Company's operations in January and February 2024:
Analysis:
Of the NTD 17,000 credit, NTD 10,000 (5% of fixed asset purchase) and NTD 5,000 (5% of export sales), totaling NTD 15,000 will be refunded. The remaining NTD 2,000 (NTD 17,000- NTD 15,000) will be a credit ABC can use to offset its output VAT in the future.
Financial institutions, certain restaurants, small companies business entities operated and supplying services solely by persons with visual impairments engaging in massage in accordance with the laws, and other business entities which are excluded by the Ministry of Finance from reporting their transactions are subject to Non-VAT on the basis of their gross business receipts. Since Non-VAT is not recoverable, it is an additional cost on purchases.
The Non-VAT rate ranges from 0.1% to 25% as follows:
| Non-VAT Payer | Non-VAT Rate | |
|---|---|---|
| Saloons and tea rooms, coffee shops and bars offering companionship services | 25% | |
| Nightclubs or restaurants that provide entertainment shows | 15% | |
| Enterprises engaged in banking, insurance, investment trust, securities, futures, commercial paper, and pawnshops | Non-core business(i.e., business not exclusive to the enterprises listed left) | 5% |
| Banking and insurance business | 5% | |
| Core business separate from banking and insurance business(i.e., business exclusive to the enterprises listed in the sub-column to the left and not related to the banking and insurance business) | 2% | |
| Purchase of services sold by foreign enterprises listed in the sub-column to the left which have no fixed place of business within the territory of the R.O.C. and such services are categorized as the non-core business of those enterprises | 5% | |
| Purchase of services sold by foreign banking and insurance enterprises which have no fixed place of business within the territory of the R.O.C. and such services are categorized as the banking and insurance business | 5% | |
| Purchase of services sold by foreign enterprises listed in the sub-column to the left which have no fixed place of business within the territory of the R.O.C. and such services are categorized as the core business separate from banking and insurance business exclusive to those enterprises | 2% | |
| Reinsurance premiums of insurance enterprises | 1% | |
| Small businesses, business entities operated and supplying services solely by persons with visual impairments engaging in massage in accordance with the laws, and other business entities which are excluded by the Ministry of Finance from reporting their transactions | 1% | |
| Consignees in agricultural wholesale markets and small business entities that sell agricultural products | 0.1% | |
Thirty-two items are exempt from VAT; these include the sale of land and medical services, and pharmaceuticals provided by hospitals. When selling VAT-exempt goods or services, the seller does not collect VAT from the buyer and the seller will not be eligible for a credit on VAT paid on purchases relating to such goods or services.
A seller can apply to the MOF to forfeit the VAT exemption if the exemption is unfavorable to the seller. Once the application is approved by the MOF, no change will be allowed for three years.
VAT returns must be filed bimonthly before the 15th day of the following period and tax due must be paid at that time. The VAT filing date is the 15th day of every odd month; e.g. a VAT return for January and February must be filed and VAT paid before March 15.
Business entities that qualify for the 0% VAT rate may apply to the tax office to file the VAT return on a monthly basis. Once approved to file a monthly tax return, the business entity cannot request approval to change the filing period for one year.
Non-VAT returns must be filed bimonthly. The Non-VAT payable, if any, must be paid to the government treasury in advance (i.e. before the Non-VAT return is filed), and the taxpayer must attach the receipt for payment of the tax to the tax return. For small business entities and other business entities exempted by the MOF, the taxpayer must pay the Non-VAT every three months according to the tax payment voucher issued by the tax authorities.
About Us
InvesTaiwan InvesTaiwan Service Center Department of Investment Promotion, MOEA Department of Investment Review, MOEA Contact TaiwanPlanning
Reasons to Invest Overview Key Industries for Investment Promotion Incentives Important Policies Success Stories
MOEA
MOEA DOIP
MOEA YouTube
Juiker App-Call Free
Let's Juiker Together
