Taiwan companies don’t have to pay taxes if the company have a great deficit within the first few years. Upon making profits, the losses incurred from the past few years are not possible to recover the offset, which is different than other countries.
In order to offset the losses, the following conditions are required to be met:
1: The identity is required to be a company or profit-seeking enterprises.
2: Proceed tax return by the due date.
3: Complete accounting books.
4: The losses and profits at the fiscal year shall be endorsed by a certified accountant.
For tax return by the due date, from the position of Taiwan Taxation Bureau, the due date is included the tax return and payment.
For example, company A suffer losses on 2022, but it sold its real estate to earn about TWD 1,000,000, excluding house and land transaction income tax about TWD 290,000. In accordance with related regulations to merge and proceed tax return, after deducting the aforementioned taxes as well as TWD 90,000 self-paid taxes. In spite of the completion of online tax return on 30th June on 2023, but the tax payment was finished until 1st July.
In this example of tax payment being delayed by one day, due to failure to file and pay as scheduled, company A’s 2022 business tax declaration case will be classified as an ordinary declaration case by the Taiwan Internal Revenue Service after the accountant checks the visa case. The impact is that the industry losses in 2022 cannot be deducted in the next ten years.
Although the Supreme Administrative Court’s 2020 in Arbitration No. 632 held that the tax law has separate provisions for declaration and tax payment, they should be two different things, and it cannot be explained that filing as scheduled includes tax payment. However, the Taiwan Internal Revenue Service’s decision on the Supreme Administrative Court’s In the appeal of the verdict, they believed that “reporting and paying taxes must be unified”. This has always been the principle for reporting and paying taxes.
Why did Company A make this mistake? According to the statement in the petition, Company A believes that 30th June in 2023 is the deadline for business tax, and the real estate and land tax is another tax item, and the deadline for filing and payment of profit-making enterprise income tax does not apply. But in fact, the real estate and land integration tax does not have a separate tax law but is included in the income tax. It’s just that the filing methods for individuals and companies are different. Just like the house hoarding tax that is generally discussed, it is not a new tax item, it is a house tax.
When individuals declare, the property and land combined tax is filed separately and must be paid within thirty days after the transaction; the individual comprehensive income tax is filed in May every year, and the filing times are different, making it difficult to make mistakes.
However, the company files joint profit-making enterprise income tax and real estate and land taxes together, and they are all taxed together in May but calculated separately.
Therefore, when a company has a real estate transaction, it needs to be handled with special caution. It is best to appoint Kaiyuan for assistance to avoid losing a big deal over a small amount.