[Taxation] Business Tax Act Amendment Sent to Legislative Yuan

2009-09-07 14:20:00

The Executive Yuan has approved a partial revision of the Value-added and Non-value-added Business Tax Act that will lower the rate of business tax on the purchase of overseas financial services within the scope of exclusively authorized business and unify tax treatment for businesses in different bonded areas. The amendment also stipulates that the business tax must be included in the prices of goods and services. The draft amendment was sent to the Legislative Yuan for deliberation in July. The Ministry of Finance (MOF) indicates that under the present regulations, the purchase of financial services from foreign enterprises and other organizations without a fixed place of business in Taiwan, with the exception of the reinsurance income of overseas insurance enterprises, are subject to a business tax equal to 5% of the payments for services. In accordance with the principle of equity, in the future the business tax on purchases of overseas financial services (except for reinsurance) within the scope of exclusively authorized business will be reduced to 2%, matching the regulations for domestic authorized financial business. Single purchases of overseas services that do not exceed a maximum stipulated by the MOF will be exempt from the business tax. The revision also provides equal tax treatment for businesses in different bonded zones by stipulating that in the future, the business tax rate on the sale of goods or services to businesses in bonded zones will be zero. The business tax rate will also be zero for goods that bonded zone enterprises sell to tax-liable areas but that, instead of being shipped to tax-liable areas, are directly exported or stored with free trade zone enterprises, customs-managed bonded warehouses, or logistics centers for export. The draft amendment also stipulates penal provisions designed to prevent businesses from evading taxes by not issuing unified invoices. If a business is found to have provided goods or services at prices that did not include the business tax but to have added the tax onto the price, and then fails to rectify the situation within a designated deadline, it will be subject to a fine of NT$1,500 to NT$15,000. In response to the abolishment of the Regulations Governing Registration of Profit-Seeking Enterprise and the Regulation for Profit-seeking Enterprise Uniform Certification in April this year, the amended Act will authorize the MOF to establish regulations governing registered matters, application for business registration, and amendment to registration or de-registration.


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