e-Tax alert 86 - Taiwan: Expected changes to VAT rules for foreign e-commerce businesses

Taiwan: Expected changes to VAT rules for foreign EC

Taiwan Ministry of Finance (MOF) announced that it will amend the Taiwan VAT regulations regarding foreign e-commerce providers and bring them into the VAT net. Pursuant to the proposed changes, foreign e-commerce enterprises outside Taiwan that sells online to Taiwan individuals will be required to register and pay VAT in Taiwan.

1000

Taiwan Ministry of Finance (MOF) announced that it will amend the Taiwan VAT regulations regarding foreign e-commerce providers and bring them into the VAT net. Pursuant to the proposed changes, foreign e-commerce enterprises outside Taiwan that sells online to Taiwan individuals will be required to register and pay VAT in Taiwan.

 

Currently, when Taiwan recipients purchase services from foreign enterprises (without fixed place of business in Taiwan), the Taiwan recipients would be obliged to compute and pay VAT to the tax authorities (as appropriate) under Article 36 of Taiwan VAT Act. As a result, foreign enterprises are generating significant revenue through online sales in Taiwan but without Taiwan VAT burden.

 

Taking into consideration OECD’s BEPS recommendations and recent observations to changes in taxing cross border e-commerce transactions in the EU, Japan and Korea, MOF is proposing that all foreign e-commerce providers which sell online to Taiwan individuals to register for and remit VAT to Taiwan tax authorities.

 

Given the continuous growth in e-commerce businesses together with the hurdle to track and collect VAT on such transactions in Taiwan, the MOF plans to shift the VAT burden to foreign e-commerce providers with a view to simplify the tax collection administration as well as providing a level playing field for both domestic and foreign online providers.

 

The proposed changes are still under discussion between the tax authorities, scholars and businesses. The proposed VAT draft amendment is planned to be submitted to the Executive Yuan at the end of September and will expect to come into effect by early next year following the passage of the law by the Legislative Yuan.

KPMG Observations

There are still a number of areas that require further clarity, for example, clearer definitions and criteria for foreign e-commerce enterprises to register for VAT in Taiwan, use of simplified registration regime, set the minimum VAT registration threshold, requirement to issue government uniform invoices etc. It will also be interesting to see how the tax authorities will enforce the changes.

 

Although not specifically mentioned in the announcement, it is anticipated that there would be future developments in the income tax area as well. E-commerce businesses should keep an eye on the progress and KPMG will continue to monitor and keep you informed in this space.

Authors
Vivia Huang
Partner, Tax department
Betty Lee
Director, Tax department


e-Tax alert

© 2024 KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit https://kpmg.com/governance.

上列組織及本文內任何文字不應被解讀或視為上列組織之間有任何母子公司關係,仲介關係,合夥關係,或合營關係。 上述成員機構皆無權限(無論係實際權限,表面權限,默示權限,或任何其他種類之權限)以任何形式約束或使得 KPMG International 或任何上述之成員機構負有任何法律義務。 關於此文內所有資訊皆屬一般通用之性質,且並無意影射任何特定個人或法人之情況。即使我們致力於即時提供精確之資訊,但不保證各位獲得此份資訊時內容準確無誤,亦不保證資訊能精準適用未來之情況。任何人皆不得在未獲得個案專業審視下所產出之專業建議前應用該資訊。

與我們聯繫