Interest Calculation on Rental Deposits and VAT Invoicing
The Taipei National Taxation Bureau has stated that businesses collecting deposits for property rentals must calculate the interest on these deposits and issue uniform invoices for VAT reporting.
According to Article 24 of the Implementation Regulations of the Value-Added and Non-Value-Added Business Tax Law, businesses must calculate deposit interest at the end of each month using the fixed annual interest rate of one-year postal savings accounts as of 1st of January. If the interest amount is minimal, businesses may opt for annual calculations instead.
For instance, if Company A rents a warehouse and collects a deposit of NTD1.8 million with a 1.6% interest rate, the monthly interest would be NTD2,400. Company A must issue a uniform invoice reflecting a sales amount of NTD2,286 and a tax amount of NTD114. Alternatively, for an annual calculation totaling NTD28,800, the January invoice would show a sales amount of NTD27,429 and a tax amount of NTD1,371.
The Bureau warns that businesses failing to comply can voluntarily report any missed taxes before an investigation to avoid penalties.
