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On 28th, the Executive Yuan passed the proposal by the Ministry of Finance to amend the Value Added and Non-Value Added Business Tax Act paragraph 1 of Article 7. The amendment augmented the purchase of specific goods or services eligible for Value Added Tax (VAT) by foreign enterprises, institutions, organizations or associations which has no permanent business establishment within the territory of the ROC for the purpose of engaging in exhibitions or temporary business activities that meet the particular requirements are qualified for tax refund (on the basis of reciprocal treatment).

If the accumulated consumption amount reached TWD 200,000 to about TWD 400,000 within one year, foreign companies which has no permanent business establishment within the territory of the ROC purchases the goods or services qualified for sales tax for the purpose of engaging in exhibitions, business trips, investigation of market conditions, market research, generation of business, marketing seminars and other temporary business activities in Taiwan maybe eligible for tax refund.

This tax refund measure is limited to foreign countries where the government also provided Taiwanese business entities the reciprocal tax refund treatment. The German Federal Financial Department has agreed to give Taiwanese business entities the VAT tax refund with rebate rate of 19% of the value of goods or services. South Korea as example, sales tax amount has to reach the equivalent of NT 8,190. Whereas for Germany, sales tax has to reach 1,000 or 500 Euros in order to qualify for tax refund.

written by Good Earth

The allocation of stock dividends received in year 2005 and after by for-profit enterprises or companies which invest in other domestic profit seeking businesses should be recorded as additional numbers of shares according to the Generally Accepted Accounting Principles. The cost of each share or book value per share should be recalculated based on total number of shares after the distribution of stock dividends. The cost of selling this type of stock dividends should be determined based on the cost of share before the market open or derived from the book value under the Income Tax Act Article 4-1. The same rules apply to the calculation of gains and losses of securities transactions by profit-seeking enterprise under the Income Tax Basic Act Article 7, section 1, item 1 and section 2.

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According to Jun15, 2010 Gazette 09900150571 by Executive Yuan and Gazette 6927 of Office of President of ROC, the corporate income tax rate was amended from 20% to 17%. The Presidential Executive Order amends Article 5 and Article 126 of ROC Income Tax Act. According to the newly amended Income Tax Act Article 126, new corporate income tax rate 17% and exemption TWD120,000,stipulated in Article 5, is effective in 2010.

written by Good Earth

written by Good Earth

By the end of January of each year, company should be careful before issuing tax withholding vouchers, check on the actual payment of the total amount of the taxpayer and the withholding tax, in order to avoid clerical error or computer error led to a short reporting of withholding voucher, the company although voluntarily made corrections to the taxes authority, shall not apply to taxes levied section 48 of Act 1 of the regulations - automatically make a report after the provisions of impunity.

According to Tax Law Article 114, section 1, paragraph 2, withholding tax has been withheld, but failing to complete the withholding vouchers promptly, or the filing a report after the deadline, or the order to repay, the company shall be entitled to a 20% of withholding tax penalty: not more than 20,002 ntd, and no less than 1500ntd, unless those who volunteer reporting or automatically fill in, pay half of the minimum as penalty.

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Profit-seeking enterprise who obtained government subsidies, of the Income Tax Act there is no tax provision, in principle, it should be fully reported in the filing year as “other income” tax.  This is further explained that if the profit-seeking enterprise system accepts the depreciation of fixed assets acquired or constructed or expanded facilities owned by the ad hoc subsidies, the subsidies of the acquisition of fixed assets owned by provision for expansion of facilities can be reported as depreciation of durable service life in the average yearly income.

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Income Tax Law of the Legislative may provide 66 of the 9 amendments, corporate retained earnings up more than half the amount of capital to be distributed to shareholders mandatory whereas keeping the current practice of imposing 10% of return earning will prevent shareholders avoid paying tax.  The Ministry of Finance holds an “optismistic view.”

After business tax comes down to 17%, the company will retain the distribution of earnings, it will be conducive to shareholder tax avoidance, and it will be best supporting measures to restore the old system before the Income Tax Act.  Company’s undistributed surplus amounted to more than half of the company’s capital, must reinforce mandatory distribution. 

Tax Director Xu Yu Zhe, said retained earnings will take years to reach half the capital, prior to 1998 when a “mandatory distribution,” was implemented, many large enterprises rasied the companies’ capital to avoid mandatory distribution.  Treasury Division collected no taxes, auditing and collection of taxes were difficult.  10% abolish levy will result in more than 200 billion or nearly 300 billion in tax losses annually.

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If an expatriate’s spouses is a citizen of the Republic of China and the expatriate is a tax resident, the couple should file annual income tax returns jointly.  However, the couple may also chooose who is dependent, the expatriate or spouse.  Aliens in the case of non-resident individuals can also choose in accordance with Article 15 of the Income Tax Act, file annual income tax jointly or pursuant to Article 73 of the same Act adopting withholding tax levied on income.  As for their choice in accordance with the provisions of article 73, the spouse shall not consolidate the expatriate’s Taiwan income for annual income tax declaration, and the withholding tax shall not be tax deductible, and no exemption and deduction are allowed.

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Ministry of Finance will address natural disasters such as earthquakes, normal stages of implementation of the extension of tax payment or stop-gap measure.  Including income tax, comoodity tax, business tax, alocohol and tobacco tax of four national taxes, will provide sub-permanent, deferred tax mechanisms, including last year’s Morocco typhoon affected households, as long as with proofing documents, in May of this year income tax return also may apply for points, extension of tax.

Last  year, due to the cause of global financial tsunami crisis, Ministry of Finance first announced the implementation o the extension of tax measures; a total of more than 10,000 cases filed which estimated in total of 21.2 billion Yuan for income tax deferment.

On the 7th of April, Treasury Department will issuance, in the next incident of property damage due to natural disasters who may request authority to grant an extension or installment taxes to these four tax contributions: income tax, sales tax, excise taxes, alcohol and tobacco tax.  Among them, the installment tax payment up to three years, deferred tax is up to three months.  Ministry of Finance stressed that only income tax may have both the installment tax payment and deferred income tax benefits.

written by Good Earth

After receiving an order from a third-country buyer, the local trading company company A declares to customs and exports the materials and unfinished goods to offshore manufacturer company B for processing. Company B is responsible for exporting the finished goods directly to the third-country buyer.

I. Outsourcing Processing & Direct Export (1)

• A. Outsourcing processing and direct export

Before shipping goods abroad for outsourcing processing, an entity shall first issue the GUI on which the value (price) of unfinished goods must be declared according to the value stated on Export Declaration approved by Customs to apply for sales for goods at zero-tax-rate. At exporting finished goods processed to the third country buyer, the entity shall issue GUI with the price computing by deducting original GUI value from total transaction amount in accordance with related transaction certificate.

(Note: GUI issuance is not required for exporting of goods.)

(Explanatory Decree No. 770665884 issued on Nov 15 1988 by Ministry of Finance)

written by Good Earth