Viewpoints from Kaizen

Individual Online Sellers Should Apply for Taxation Registration   The threshold of individual online sellers who run online businesses for profit-making purpose, was based on the total “average” sales in the last six months. However, online shop transactions have become more frequent in recent years, the Taiwan Ministry of Finance issued an explanatory order at the end of January 2020, stating that the business tax threshold of online seller has been changed and based n the total sales of “each month”, i.e. sales of goods exceed NTD 80,000 or sales of labour services exceed NTD 40,000. Sellers should apply for taxation registration for their business, which is stricter than before.   According to the regulation (Order No. 10904512340) issued by The Taiwan Ministry of Finance on 31 January,2020, in considering with the fairness and online transaction practices, individuals who sell goods or labour through online for profit-making purpose, should  apply […]

Documents Required for Taiwan Companies Reporting Overseas Investment Loss   According to the Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax Article 99 Subparagraph 2 “Investment loss should provide prove on capital reduction to cover losses, merger and acquisition, bankruptcy or liquidation. However, if the invested business located in a foreign country and did not participate in any actual operating activities, company should provide related documents on the business, which engaged in actual operating activities and caused losses to the invested enterprise due to business losses, that the enterprise shifted its investment to. The mentioned documents should be verified or certified by Taiwan Embassy, Commercial Representative Office or Foreign Trade Organization. For those in Mainland China, documents should be verified or certified by the organization managing issues on people’s relations between Taiwan and Mainland China, which was appointed by the Mainland Affairs Council ROC (Taiwan) of Executive Yuen.”   For […]

Common Mistakes of Foreign Company Applying Taiwan Income Tax Act Article 25 According to the profit margin stipulated in Taiwan Income Tax Act Article 25, simplifying the calculation of part of the contract costs is one of the services that many foreign companies often apply for when they run their business in Taiwan.   There are four types of applicable scope of business, including (1) operating international transportation, (2) contracting construction projects, (3) providing technical services, (4) leasing machinery and equipment, in Taiwan. If there are difficulties in dividing the cost of the above mentioned 4 types, with the approval from Taiwan Ministry of Finance, foreign company operating international transportation can calculate its income within Taiwan at 10%. For the other 3 types, income is calculated at 15%. So, the withheld income tax rate has been reduced from 20% to 3% (i.e. 20%*15% = 3%).   Taiwan National Taxation Bureau […]

Attention to the Prescription on the Outstanding Accounts Payable for Taiwan Companies It is inevitable that accounts payable happens in businesses. The Taiwan National Taxation Bureau reminds that when companies declare for corporate income tax, it is important to pay attention to the prescription on various kinds of outstanding accounts payable, which can vary from 2 – 15 years. Furthermore, if a payment is unsettled upon prescription, it must be changed to other income in accounting in that current year.   When Taiwan companies file tax returns, many expenses will be listed as expenses in the year in which rights and responsibilities are incurred. But in fact, the payment has not yet been paid. Since the Civil Code Article 125 to 127 stipulates prescription for various payments, it continues to be delayed until the time limit of the creditor’s claim expires, in theory, the Taiwan company does not have to […]

The Impact of Taiwan Civil Code New Amendment on Taxation   According to Taiwan Civil Code, the age of majority has been lowered to 18 years old. The Taiwan Executive Yuen also amended the regulations of tax allowance in the Income Tax Act and the Estate and Gift Tax Act accordingly.   In terms of income tax, what is affected is the dependent support regulations. According to the previous version, the taxpayer’s children who are under 20 years old or over 20 years old but are still in school, physically or mentally disabled or unable to earn a living can be filed as dependent support by their family, which would increase the tax allowance for the declaring household. After the Civil Code is amended, the tax act no longer defines the age of the children being supported, instead it follows the Civil Code to examine if the target is an […]