The Ultimate Guide to Business Tax in Taiwan

business tax taiwan

Reasonable taxation is imposed by the competent authority for the utilization and benefit of the general public. The tax system imposed in Taiwan includes numerous classifications of taxes imposed on institutions, organizations, and individuals.  Among these is the business tax Taiwan.

The tax rate and details regarding business tax will be enumerated in this article. This will provide an informative guide on the business tax for companies conducting operations in Taiwan.

Taiwan’s Business Tax

Taiwan imposes a business tax under the VAT system and the non-VAT system. Since there are differences in tax laws per location, here are the particular details on business tax Taiwan.

The business tax applies to the sale of goods and services in Taiwan. Therefore, all goods or services sold within Taiwan, and even importation of goods are subjected to business tax as stipulated by authorities. Every business seller or service industries need to pay the business tax that applies to them. 

When goods are transferred from one party to another with compensation, it falls under the definition of the sale of goods. To be precise, the following are particular examples of the sale of goods that are subjected to business tax in Taiwan:

  • When one business purchases goods for the benefit of another party and promptly delivers the purchased goods.
  • Goods made and purchased by a corporation for their use.

Aside from goods, services are also under the business tax in Taiwan. The sale of services refers to the provision of goods and the supply of services rendered for another party. Of course, with compensation to the provider.

Lastly, the importation of goods is also under the scope. Import of goods is within the territory of Taiwan, except those transported goods going to the bonded zone business entity. 

In cases of imported goods, the receivers will pay the business tax accordingly. And the customs will manage such transactions. 

Two systems of business tax are imposed on taxable transactions, and these are the value-added tax, or VAT, and the gross business receipts tax, or the GBRT.

Value-Added Tax

In Taiwan, VAT applies to general industries at a rate of 5%. This works by collecting the output VAT accumulated from a buyer during the sale of a good or service. Then, the input VAT is deducted on the purchase and the seller remits the VAT balance to the authorities.

Gross Business Receipts Tax

The second system of business tax is the GBRT. In contrast to VAT, the GBRT only applies to specific industries such as financial institutions and small businesses. And, rates also differ depending on the function of the companies.

The GBRT rates are applied as follow:

  • Financial institutions – 2%, 5%
  • Sale of agricultural products – 0.1%
  • Small size business – 1%
  • Special catering industries – 15%, 25%

0% VAT and Exemptions 

The tax-based system also has some exemptions. For instance, zero-rated entities include anything related to exported goods and services and duty-free goods. An exempted status applies to healthcare services, academic publishing, and land sales.

Who Needs to Pay Business Tax in Taiwan?

The previous information led us to the details of business tax Taiwan. The next important information is who will be needing to pay these taxes.

According to the Company Act, a business entity is required to register with the Ministry of Finance and Ministry of Economic Affairs prior to having their business operations in place. 

According to the laws that apply to Taiwan, the business entities that plan to conduct the sale of their goods or services must have their registration first. Each business is considered a fixed business in a particular location in Taiwan.

On the other hand, foreign companies can apply for an exemption from this requirement of tax registration if they will do technical cooperation services in Taiwan.

It is stipulated in the law that the following are required to pay business tax in Taiwan:

  • Businesses that sell goods or render services in Taiwan
  • Holders of imported items
  • A foreign entity without a fixed location in Taiwan and sells electronic services to Taiwan clients is required to pay business taxes

Filing Business Tax in Taiwan

Business operations have the responsibility to file for the appropriate taxes that applies to their company. 

The Filing Process

A business entity required to pay business tax must follow the filing process from the Taiwanese tax authority.

Application for taxation registration is relatively quick with the new guidelines set by the Ministry of Finance. The ministry has an eTax Portal. Here, the business enterprise has the option to apply for it by themselves as the taxpayer, or thru the help of an agent.

The three main steps for applying VAT on cross-border electronic services include the following:

  1. Apply for taxation registration
  2. Apply for account and password
  3. Once completed, the enterprise can file the business tax return and pay the appropriate amount of VAT

The registration process will yield a VAT registration number for the taxpayer. This number is very important and enterprises must take note of this. Furthermore, the number reflects that the enterprise is now a legal business.

From the perspective of the authorities, the VAT registration number will help track a particular business as it is now registered and identifiable in the system. Hence, it will be quick to note the taxes that have been paid, the tax credits received by the business, and the taxes charged from purchases of goods and services of these businesses.

It is also the responsibility of the businesses to ensure the filing of business tax returns every two months. Also, the tax payments are expected to be made at the same time with filing the returns. Penalties are put into place for businesses proven to commit tax evasion.

How Can We Help?

Taiwan authorities allow registration through the aid of agents. Look no further, as Premia TNC is in service.

We are a professional firm that can provide accounting services, financial auditing, and taxation. Our team is composed of experienced individuals that can help maintain proper records and ensure that no deadline is missed by a company.

Given the numerous responsibilities of a business holder, it is very easy to miss out on financial reports and tax deadlines. With Premia TNC, worrying about these will not be a problem. Reach out to our services and we will be looking forward to hearing from you!