Navigating the numerous tax-related deadlines and complex procedures in Taiwan can be challenging for business owners. The Taiwan Ministry of Finance aand National Taxation Bureau regularly issue tax regulations and rulings, but their technical language often causes confusion. This article simplifies these regulations, providing clear guidance on important tax filing deadlines and essential information, enabling you to manage your tax filings efficiently and on time.
Taiwan Tax Filing Deadline
In Taiwan, businesses must navigate several types of tax filings, including corporate income tax, value-added tax (VAT), and withholding tax (WHT). The corporate income tax return must be filed within the fifth month following the end of the tax year. For companies with a tax year ending on December 31st, the deadline is May 31st of the following year. The tax filing form, written in Chinese, requires detailed financial information such as the balance sheet, corporate income tax calculation, undistributed income tax form, reconciliation forms for revenue and expenses, alternative minimum tax calculation, list of fixed assets, and dividend distribution schedule. Companies with annual sales exceeding NTD$100 million must have their tax return audited by a local certified public accountant (CPA).
To ensure timely and accurate submissions, it is crucial to prepare in advance and manage your financing schedule effectively. By understanding the deadlines and required documentation, businesses can avoid last-minute rushes and ensure compliance with Taiwan’s tax regulations. This proactive approach allows sufficient time for review and adjustments, facilitating a smoother tax filing process.
Considering Provisional Income Tax Filing in Taiwan
Taiwan’s tax regulations allow for a provisional income tax system, akin to installment payments, where taxpayers make a temporary payment to the National Taxation Bureau between September 1st and 30th, calculated as half of the previous year’s annual tax amount. This provisional payment can be offset against the annual income tax due in May, with any overpaid amount refundable, thus preventing a large lump-sum payment. Companies facing cash flow issues can opt to file based on actual profits from the first half of the year, but to benefit from reduced provisional tax, the filing must be audited by a local CPA.
Overview of VAT and Withholding Tax Regulations in Taiwan
Taiwan’s tax regulations subject the sales of goods and services to business tax under two systems: the value-added tax (VAT) system and the non-value-added tax (Non-VAT) system. The VAT system, similar to those in many European countries, applies to the sales of goods and services within Taiwan. VAT filings are generally performed bimonthly, with deadlines on the 15th of the following month (e.g., March 15th for January and February filings). The tax payable is calculated by subtracting input VAT from output VAT, with any excess input VAT carried forward to the next period. Exporting companies can benefit from a 0% VAT rate and claim input VAT refunds, with the option to file VAT monthly to improve cash flow.
Annual withholding tax reporting is another crucial aspect of Taiwan’s tax system. Businesses with local employees or those paying professional service fees to lawyers or CPAs must report annual payments to the National Taxation Bureau by the end of January of the following year. This reporting requires detailed personal information for individual taxpayers, such as name, ID, and address. For law firms or CPA firms, the reported information includes the firm’s name, address, and GUI number.
Further Regulatory Filing Deadlines
Launched in 2018, the company representative and major shareholder reporting policy mandates that companies report their directors, supervisors, and 10% shareholders, including their nationality, birth date, ID, and shareholdings. For newly established companies, the reporting deadline is 15 days post-incorporation, while for companies with no changes during the year, the deadline is March 31st.
Taiwan Tax Filing Schedule
The tax calendar outlines key filing events and deadlines for various tax categories, ensuring businesses and individuals remain compliant. Income tax filings for enterprises occur annually in May, with provisional tax filing in September, while individuals must submit their income tax returns in May. Business tax, commodity tax, and tobacco and/or alcohol tax filings follow a bimonthly or monthly cycle, with payments due by the 15th of the next period. Estate and gift taxes require filing within six months of death and 30 days of donation, respectively. Specific taxes on securities, futures, and selected goods involve real-time withholding and settlement through authorized agents, with payments processed through the relevant financial offices or customs.
Both head offices and branch offices share responsibilities for tax filings, with branch offices handling most of the routine tax returns. For estate and gift taxes, both levels assist with applications, while customs manages import-related taxes. Head offices and branches coordinate on security and futures transaction taxes, ensuring timely remittance to the National Treasury.
To summarize, in Taiwan, the tax year aligns with the calendar year (1 January to 31 December). Husbands and wives residing in Taiwan for over 183 days must file joint returns, with three options available to mitigate higher progressive tax rates. Non-residents staying less than 90 days are exempt from filing if local employers withhold taxes. Individual taxpayers must file and settle any tax balance by May 31 of the following year, with no extensions. Locally paid salaries are subject to withholding, and late payments incur daily interest from 1 June until settlement.
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FAQs
What are the penalties for failing to file corporate income tax on time?
If a taxpayer files a tax return within 15 days after receiving a delinquent notice, a 10% fine on the assessed tax will apply, with penalties ranging from NT$3,000 to NT$60,000. If the taxpayer fails to meet this deadline, the fine increases to 20% of the deemed tax, with penalties ranging from NT$9,000 to NT$180,000.
What are the consequences of not filing VAT within the required deadline?
The business visa fee is NTD$1,600 (USD$50) for most nationalities and NTD$5,280 (USD$160) for US nationals. Expedited processing costs NTD$800 (USD$25). Tax returns filed within 30 days late incur a 1% surcharge every two days, with fines between NT$1,200 and NT$12,000. Delays beyond 30 days are fined 30% of the payable tax, ranging from NT$3,000 to NT$30,000. If no tax is due, surcharges are NT$1,200 for late filing and NT$3,000 for non-filing. Continued non-payment beyond 30 days may result in court enforcement and business suspension.
What penalties apply if a company fails to report changes to its representative or major shareholders?
Companies failing to report representatives and major shareholders will receive a rectification notice. If unresolved, directors face fines between NT$50,000 and NT$500,000, escalating to NT$500,000–NT$5,000,000 for further non-compliance. Persistent violations may result in incorporation revocation.
When are income tax returns due in Taiwan?
Income tax filings for both individuals and enterprises are due annually in May. Enterprises also need to file a provisional tax return in September. Individuals must settle any tax balance by May 31, with no extensions allowed.
How often do businesses need to file other taxes in Taiwan?
Business tax, commodity tax, and tobacco/alcohol tax follow a monthly or bimonthly schedule, with payments due by the 15th of the next period. Estate tax must be filed within six months of death, and gift tax within 30 days of donation.
