Inspection on Online Sellers by Taiwan Taxation Bureau
In the past, the tax inspection on online sellers by Taiwan Taxation Bureau is conducted passively, which main source of investigation is though the public reports. From 2022, The online tax inspection system (Referred to public search system) from financial data center is furnished to investigate by Taxation Bureau proactively. It was hard to control all information of group buying held by sellers in the past, but with this system, the information of personal page, fan page or club can be found via “Key Word” and ranked the page with higher number of fans or number of likes to make an inventory to investigate furtherly by Taxation Bureau in Taiwan.
For the growth of group buying for Taiwan cosmetic products, perfumes or soaps, most of sellers are involved with this business on each famous online platform, but fails to register a tax identification number, which means these sellers neglect to issue the uniform invoice intentionally. Therefore, the sellers are required to provide their account and the amount of transaction with Taxation Bureau. “To recover the business income tax first and recover the individual income tax second” this is the routine procedure to punish those online sellers who intend to evade taxes by Taxation Bureau in Taiwan in the current stage.
For instance, for the part of business income tax, Ms. Liao sold her products via Facebook from 07/09/2019. The amount of sales is reached up to the point of taxation on January in 2020 and even more than TWD$200,000. To compute the amount of evasion of issuance of uniform invoice from January for Ms. Liao, the total amount of sales is TWD$16,200,000, which the required amount to recover is TWD$810,320. (TWD$16,200,000 Amount of Sales × 5% Business Income Tax Rate = TWD$810,320 Business Income Tax.)
For the part of individual income tax, the ratio of profit among online selling industries is pretty substantial, which is 12%. The business income is more than TWD$1,940,000 (TWD$16,200,000 Amount of Sales x 12% Ratio of Profit = TWD$1,944,000 Business Income). Despite of the declaration of individual income tax in 2020 proceeded by Ms. Liao, she is still required to recover the amount of taxes about TWD300,000 or above in the applicable rate of 20% after summing up the amount of business income about TWD$1,940,000. Furthermore, the neglect of declaration of business income is not affiliated as withholding information, which represents the imposition of fine of evading amount of tax in 0.5 times is required.
In conclusion, the total items to recover as below:
Business Income Tax- TWD$810,000
Individual Income Tax- TWD$300,000
Punishment of fine in 0.5 times of Individual Income Tax- TWD$150,000
It is emphasized that the procedure of tax inspection mainly aims to investigate the online sellers. Due to the orders which usually are issued on the online platform by sellers, the contact information and sales information of sellers is easy to access within the investigation. The purpose of tax inspection is to provide each seller with the fair competitiveness in the same regulated taxation basis.