Aiming at alleviating the impact of the coronavirus (COVID-19) pandemic, the Taiwan government introduced several supportive tax measures covering a wide range of different aspects. This e-tax alert summarizes the major ones relevant to foreign investors including: (1) Deferral of tax payments or by installments for affected enterprises and individuals; (2) Extension of tax filing and payment deadline under special circumstances (e.g. quarantine or isolation) and (3) Corporate income tax 200% deduction on certain salary expenses.
On March 25, 2020 Taiwan Ministry of Finance (MOF) announced a special guideline allowing taxpayers having difficulties to make tax payments to apply for deferral of tax payments or by monthly installments.
1.1 Applicable period
The special guideline is applicable to tax payments due date fall between January 15, 2020 to June 30, 2021.
1.2 Applicable taxpayers
Taxpayers having difficulties to make tax payments by the statutory deadline due to COVID-19 may apply for deferral of tax payments for a maximum of 12 months or by monthly installments of up to 36 months, without late payment interest, if meeting any of the following conditions:
For Business entities
1.3 Application procedures
Taxpayers should submit the prescribed application form together with relevant supporting documents with the competent tax authorities by the original tax payment deadline as stipulated.
1.4 Applicable taxes
Individual income tax, individual house and land transactions income tax, corporate income tax, VAT, commodity tax, liquor & tobacco tax, specifically selected goods and services tax, house tax, land value tax, vehicle license tax, and relevant interest and penalty of these taxes.
1.5 Points to note
This special relief is only for granting deferral or installment payment of tax. If there is any tax return needs to be filed (e.g. income tax, VAT, etc), the returns should still be filed within the original statutory deadline.
Tax payments should be made on time following the revised timeline further to the grant of the above deferral or installment scheme. If fail to make the payments on time, the tax authority will demand for one-off settlement on all outstanding balance within 10 days.
On March 5, 2020 Taiwan MOF announced a tax ruling which grant affected taxpayers an extension to file and pay their taxes.
2.1 Applicable period
This ruling is applicable to tax filings or payments originally due between March to May 2020.
2.2 Applicable situations
For individual taxpayers or company taxpayers whereas the representative person, in-charge accountant, or the CPA, booker engaged for filing the returns is under isolation or quarantine due to COVID-19 during the original prescribed time limit of tax filing and payments.
Relevant tax filing and payment deadlines may be extended under the following schedule without late payment interests:
2.3 Application procedures
No pre-application is required but taxpayers should attach the notice of isolation, quarantine, medication or other relevant documents during the tax filing procedures under the extended deadline. For taxes levied under special assessment basis (e.g. compared to self-reporting mechanism), taxpayers may also provide the above supporting documents to the relevant in-charge tax authorities before the above extended deadline to facilitate relevant tax assessment arrangements.
2.4 Points to note
In case the above personnel is still under isolated medication by the extended deadline, further 20 days extension is granted following the end of the isolated medication period.
As part of the Special Act on COVID-19 Prevention, Relief and Restoration announced on February 25, 2020 to alleviate the social and economic impact, Taiwan MOF also announced a tax ruling on March 10, 2020 to provide guidance on how companies can deduct additional salaries expenses for employees who are affected by COVID-19.
3.1 Applicable period
The Special Act is applicable from January 15, 2020 to June 30, 2021
3.2 Applicable expenditures
Salaries, wages, service pay and other regular compensations paid to employees during their statutory leave period falling under any one of the following reasons:
3.3 Application procedures
The following information and documents should be provided under prescribed format during corporate income tax filing:
3.4 Points to note
Apart from the above, the Taiwan government also released other relief policies covering VAT and customs supportive measures on certain medical supplies (e.g. protective masks, medicinal alcohol and its raw materials); temporary relief on house tax and vehicle license tax during its idle period in light of the current COVID-19 situation; and pro-rata exemption on VAT and amusement tax for taxpayers levied under special assessment basis during its business suspension period.
The Taiwan government announced different supportive measures to encounter the impact of the coronavirus pandemic situation.
In light of the different applicable conditions, procedures and timelines on these policies, taxpayers should evaluate the particular supportive measures that are applicable to them, together with supporting documents and relevant preparations going ahead.
Ellen Ting, Partner
Niki Yam, Associate Director
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