Year-End Employee Gifts: VAT and GUI Compliance Reminder
At year-end, companies often hold year-end banquets, and provide goods for use as employee raffle prizes. If goods are purchased with the intent to gift them to employees and the input VAT is not claimed, the gift is not deemed a sale and no GUI is required. However, if the goods were not originally intended to be gifted to employees, were recorded under inventory or expense accounts, and the input VAT paid at the time of purchase was claimed as a credit against output VAT, then when the goods are gifted to employees, the transaction shall be deemed a sale of goods. A GUI must be issued at the fair market value, and may not be used to claim a credit against output VAT.
Example: Company A purchased 10 robot vacuum cleaners for NT$120,000 and claimed NT$6,000 input VAT. At the year-end banquet, Company A decided to use the 10 robot vacuum cleaners as raffle prizes to reward employees. In this case, Company A must issue a GUI at the fair market value, listing itself as the purchaser, and may not claim a credit against output VAT. In another case, Company A purchased 5 handheld vacuum cleaners for NT$50,000. Since it had already decided at the time of purchase that they would be used as gifts or for entertainment purposes, and the input VAT paid was not claimed as a credit against output VAT, then when these gifts are given away, the transaction is exempt from being deemed a sale, and no GUI is required.
