Taiwan — VAT – indirect tax guide
Taiwan — VAT – indirect tax guide
Explore the requirements and rules that apply to indirect taxes in Taiwan — VAT.
General
VAT.
Standard rate:
5 percent.
What supplies are liable to the standard rate?
The sale of goods and services in Taiwan as well as the importation of goods into Taiwan, excluding financial institutions; special vendors of beverages and food; and small businesses (as these are subject to gross business receipts tax (GBRT)).
Are there any reduced rates, zero- rates or exemptions and if so, what do they apply to?
Zero-rated supplies include goods supplied for export and certain services that are either exported or are zero-rated: exported goods or certain goods sold by duty-free shops; services relating to export or services provided in Taiwan but used in a foreign jurisdiction; certain international transportation; vessels and aircraft used in international transportation and deep-sea fishing boats and goods and maintenance services provided to such; goods or services sold to a bonded zone business entity for its operational use; and certain goods sold by a bonded zone business entity.
Exempt: sale of land; water supplied to farmland for irrigation; certain medical services; certain social welfare services; certain educational services; certain educational or academic publications; the goods or services sold by student-run shops of vocational schools that do not serve outsiders; certain publications produced and sold by legally registered newspaper and magazine publishers; news agencies and television and broadcasting stations; the goods or services sold to members by cooperatives managed in accordance with the law and business consigned by government to cooperatives, etc.
VAT/GST registration
Who is required to register and what is the threshold?
The head office of a business entity and its branches with fixed places of business in Taiwan must each register for VAT before operating. Foreign enterprises having no fixed places of business within Taiwan selling electronic services to Taiwan-based individuals must register for VAT in Taiwan if their annual sales exceed the threshold of 480,000 New Taiwan dollar (NTD).
Is voluntary registration possible?
Yes.
Is voluntary registration available for an overseas company or a fiscal representative?
Yes.
VAT/GST compliance
VAT/GST recovery
Are there any items that a registered business cannot recover VAT on?
Yes, they include the following:
- purchases for which certain supporting documents are not obtained or kept according to the law
- purchases not for the use of principal and ancillary business operation except purchases for the support of national defense, provision of morale services to the troops or contribution to the government
- goods or services for social relation purposes
- goods or services rewarded to individual employees
- passenger cars for personal use.
Can an overseas company recover VAT if it is not registered?
No, one exception is that input VAT may be refundable if it relates to a foreign company participating in exhibitions or conducting temporary business activities (such as traveling, training, inspection, market investigation, procurement, etc.) in Taiwan, provided certain conditions are met.
How long does it typically take to obtain a VAT refund following a return filing?
Generally, refunds on input VAT relating to zero-rated sales and purchases of fixed assets can be obtained within 2 months of the return filing.
However, a refund of accumulated input VAT upon cessation of a business or due to other reasons may take longer, as a special refund application is required.
Invoices
Are there specific requirements for the content of invoices to be considered valid for VAT purposes?
Yes, the seller should issue a Government Uniform Invoice (GUI) to the buyer. GUIs must contain the buyer’s name; buyer’s business number; date; transaction details; quantity; unit price; item subtotal; selling amount; tax category and amount; and grand total.
Special indirect tax rules
Does a reverse charge or indirect tax withholding mechanism apply?
Yes, the VAT on services supplied by a foreign entity who does not have a VAT registration in Taiwan should be accounted for by the buyer. The buyer should report the purchase and calculate the related VAT on the VAT return.
However, if the buyer is a business entity that engages in VAT-taxable business only and the purchased services are used solely for the taxable business, such VAT is exempt.
Other indirect taxes
Disclaimer
All information within this guide is provided by KPMG professionals in Taiwan and based on information available as of September 2019.