Taiwan

Taiwan Business Tax and Profit-Seeking Enterprise Income Tax for the Cross-Border E-commerce   In the modern age, with the popularization of the internet and mobile technology, purchasing of the services online such as the usage of Cross-Border E-commerce advertisements, purchasing of online games, and videos are getting popular. When there are sales of electronic service to the natural person within the territory of Taiwan, the Cross-Border E-commerce should in accordance with the Articles No. 2-1 of the Value-added and Non-value-added Business Tax Act, the E-commerce shall be the taxpayer of the business tax, has the obligation to pay for the business tax. If the sales target is not the natural person within the territory of Taiwan, the sales person of the E-commerce should in accordance with the Articles No.36 of the Value-added and Non-value-added Business Tax Act. Unless the purchaser is a business entity which computes its tax in accordance […]

Tax Saving Option for the Estate Tax in Taiwan   In this modern age, people live longer, a grandfather would like to distribute the property, his children are aged, and grandchildren are grown-up. When considerate of the tax saving of the property, between the “Generation-skipping Transfer Before Death” or “Children Abandon of Inheritance”, which way will be better?   All property of a decedent who was the Taiwan Citizen and resided in the Taiwan continuously shall be subject to estate tax of Estate and Gift Tax Act, no matter the estate is located within or outside the Taiwan. Property left by a decedent who was the Taiwan citizen but resided outside the Taiwan continuously or who was the non-Taiwan citizen shall be subject to estate tax for the estate that located within the Taiwan.   The taxpayers of the estate tax shall be: The executor appoint in the will, will […]

Guide to Taiwan Other Taxes Commodity Tax   (1)    Scope of Taxation   Commodities list in the “Commodity Tax Act”, whether manufactured domestically or imported from abroad shall be subject to commodity tax in accordance with this act except as otherwise provided by any other laws. The commodity tax levies depend on the type of goods, and the applicable tax rate or tax amount is also different (non-progressive tax rate).   (2)    Taxpayers   The Commodity Tax is levied when the taxable goods upon departure from a manufacturer’s premises or when the imported taxable goods completed the customs duties payment. The following table shows the scope of taxation and responsible taxpayers under the commodity tax:   Scope of Taxation and Taxpayers under Commodity Tax Scope of taxation Taxpayer Exception Commodities manufactured domestically Manufacturer   Commodities manufactured under consignment contract Consignee (i.e. manufacturer) If the consignor is a manufacturer of taxable […]

Guide to Taiwan Anti-Tax Avoidance Measures   Introduction   In view of many anti-tax avoidance measures have already been placed in the United States, EU countries and many other countries, Taiwan has set anti-tax avoidance measures such as transfer pricing and anti-thin-capitalization in accordance with international regulations. At the same time, the Income Tax Act regarding the addition of “controlled foreign companies” and “actual management offices” has also been passed, and the implementation date is yet to be announced.   Transfer Pricing   Taiwan referred to the transfer pricing guidelines and related measures of the OECD and the United States and European countries. Formulated and issued “Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax on Non-Arm’s-Length Transfer Pricing” (hereinafter referred to as the “TPAS”) as the tax authority to investigate the result of transactions between the parties, whether there is an irregular basis.   (1)    Legal Basis   According to […]

Tax Differences Between Setting Up a Branch and a Subsidiary in Taiwan   For a foreign entity that is seeking to do business in Taiwan, a branch and a subsidiary are two commonly utilized methods. From an accounting perspective, a branch is equivalent to an extension of the parent organization and maintains its accounts jointly with the parent. The parent company is fully liable for the branch’s liabilities and legal claims. In comparison, a subsidiary is a separate corporate entity set up by the holding company. It maintains a separate set of books and its liabilities and legal claims cannot be passed on to the parent. When a foreign corporation expands its business in Taiwan, it usually involves in trading of common products, warehouse registration, manufacturing for domestic sale or export sale, or further invest in other business entities in exchange for shares.   Which is the most tax-efficient business […]

Introduction to Individual Income Tax in Taiwan   Individual Income Tax (IIT) in Taiwan, is a tax levied on an individual’s earnings and is only levied on Taiwan-sourced income. Aggregated income is the combination of all earnings of the taxpayer, net of various exemptions and deductions, and is taxed at a defined rate. Tax residence and non-tax residence had been introduced to different tax rates. Individual income taxpayers are divided into residents and non-residents. The resident is generally taxed at the progressive rate and the non-resident at a fixed rate applicable to the types of income generated.   Tax Basis   Taiwan’s IIT is taxed based on the “territorial principle” and, with the following exceptions, is only levied on Taiwan-sourced individual income: (1)     Taiwan citizens who have earnings from Mainland China (e.g. salaries from working in Mainland China) are subject to Taiwan income tax, but income tax paid in Mainland […]

Guide to Taxation System in Taiwan   Introduction   The Taiwan tax system is a general term of the Taiwan tax regulations and audit management systems. The current taxation in Taiwan can be divided into two types, the national tax and local tax (municipal and country(city) tax) from the tax revenue right.   The national tax includes profit-seeking enterprise income tax, individual income tax, estate tax and gift tax, commodity tax, business tax, tobacco and alcohol tax, futures transaction tax, securities transaction tax, customs duty and mining tax.   The local tax (municipal and country(city) tax) includes land tax (land value tax, land value-added tax), stamp tax, vehicle license tax, house tax, deed tax, entertainment tax and special tax. At present, the tax revenue in Taiwan accounts for about 70% of the total revenue, and the income tax is the most important tax, it accounts for about 40% of the […]

Guide to Taiwan Profit-Seeking Enterprise Income Tax   Introduction   The Profit-seeking Enterprise Income Tax is the income tax levied by the Taiwan government on the surplus of Taiwan’s profit-seeking enterprise, and the nature of it is similar to Enterprise Income Tax in China. The taxpayers includes corporate legal persons, and sole proprietorship, partnership, company (including a Taiwan branch of a foreign company), and any other form of organization that operates for profit-seeking purposes through a fixed place of business, regardless of whether the enterprise is owned by the government, private sector, or jointly by the government and the private sector. The taxable income of profit-seeking enterprise is the net income after deducting various expenditures, losses and taxes from their total income.   Tax Base and Tax Rate   A profit-seeking enterprise in the form of a sole proprietorship, partnership, or company (including a subsidiary that is wholly owned by […]

Guide to Taiwan Business Tax Introduction   Taiwan implemented the business tax, which levied on value added in 1986. The scope of taxation includes the sales of goods, services and import of goods. The tax base is the balance of its total revenue minus capital equipment and non-capital expenditures in every month or every two months. Business tax rate divided into two types, the general tax calculation business entities and special tax calculation business entities. The former refers to the business entities who are taxed on value added tax, and the latter refers to the business entities who are taxed on the total amount of revenue.   Scope of Taxation   Pursuant to the Value-added and Non-value-added Business Tax Act (Business Tax Act or BTA), the sale of goods and the provision of services in Taiwan, as well as the import of goods into Taiwan, are subjected to business tax. […]

Comparison of Major Taxes in Taiwan and Mainland China No. Taiwan Mainland 1 Profit-seeking Enterprise Income Tax: § Basic tax rate is 20% § The tax rate is 12% after the implementation of Income Basic Tax Act (thereafter [Alternative Minimum Tax]). § For a profit-seeking enterprise with independent legal personality, while the current year’s surplus is not distributed in the following year, an additional 5% profit-seeking enterprise income tax is required § Loss carrying forward period is 10 years Enterprise Income Tax §  Basic tax rate is 25% §  Preferential tax rate for high-tech enterprises: 15% §  Preferential tax rate for small low-profit enterprises: 10%, 5% §  No tax regulations for undistributed surplus §  Loss carrying forward period is 10 years 2 Value-added and Non-value-added Business Tax: Scope of Taxation: § In /into Taiwan –     Sales of goods –     Sales of services, including sales of [electricity labor] –     Import of […]