Jun 16

Due to a downturn in the Indian market, according to Counterpoint Research data, Samsung’s global shipment market share shrank to 19.1% in April, making Huawei, which has been following closely behind, surpass Samsung for the first time in single-month data, making Huawei the global smartphone shipment leader with 21.4% market share.

written by Good Earth

Jun 12

The announcement included in Chinese Premier Li Keqiang’s annual Work Report states that China will reduce business expenses by over RMB 2.5 trillion this year, including RMB 500 billion in tax and fee cuts, in an effort to help the economy recovering from the downturn caused by the COVID-19 pandemic.

The Chinese government will further reduce value-added tax (VAT) rates and pension insurance rates in 2020, and extend various preferential tax and fee policies until the end of 2020 for industries impacted by COVID-19, including public transportation, catering and hospitality, tourism and entertainment, and culture and sports.

The due date for the Income Tax payable for 2019 for small enterprises and sole proprietors could be extended to next year (2021). However, they are required to file tax return for Prepayment of Income Tax in order to be qualified for extension.

written by Good Earth

Jun 08

According to the Company Act Article 356-8, a close company may state in its Articles of Incorporation that its shareholders meeting can be held by means of visual communication network or other methods promulgated by the central competent authority. In case a shareholders meeting is to take place via such methods, then the shareholders taking part shall be deemed to have attended the meeting in person. A close company may also state in its Articles of Incorporation that if it is agreed by all its shareholders, any action to be taken at a shareholders meeting may be taken, without an actual meeting, by written consents to exercise their voting power.

In this case, a shareholders meeting held in accordance as mentioned above shall be deemed to have been convened, and the shareholders who exercise their voting power by written consents shall be deemed to have attend the meeting in person.

written by Good Earth

Jun 05

Shanghai Announces First Round of Tariff Waivers on U.S. Import Items

Statistics released by the Shanghai Customs show that the Shanghai Customs have implemented waivers for the first batch of tariff-imposed US goods. By the application deadline on March 11, 2020, a total of 429 companies have received tax refunds. The total tax refund amount came to RMB 631 million.

Signed Investments in Heilongjiang Free Trade Zone Exceeds RMB 170 billion

According to the Heilongjiang Provincial Department of Commerce, the China (Heilongjiang) Pilot Free Trade Zone has innovated the way of attracting investment during the COVID-19 epidemic by attracting new investments online. By the end of September 2019, the Heilongjiang Free Trade Zone has listed 94 newly signed projects with investment of RMB 175.365 billion.

written by Good Earth

Jun 04

Officials reminded that if an overseas e-commerce company has cross-border sales of electronic services to individual consumers in Taiwan in 2019, even if the e-commerce company has applied for cancellation of tax status, it is still required to file corporate income tax this year.

The sales methods of overseas e-commerce in Taiwan can be categorized into two types. If the overseas e-commerce directly sells electronic services to consumers, it is in the form of B2C, but if it is sold to enterprises and then resold to consumers, it is a B2B form.

If it is B2B, business tax should be declared within two and a half months after the remuneration is paid by the Taiwan merchants. Corporate income tax is a type of withholding mechanism, and tax is deducted in advance according to the net profit ratio and contribution.

According to the “Levying of the Income Tax on Cross-Border Electronic Services by a Foreign Profit-Seeking Enterprise”, when filing tax, overseas e-commerce companies must provide proof documents including contracts, business scope, and domestic and foreign transactions to the National Taxation Bureau. Generally speaking, the net profit ratio of overseas platforms is mostly 30%, and the contribution degree is determined by the transaction model. If the transaction is mostly in Taiwan, the contribution rate is mostly 100%. If there is a cross-border situation, it may be 50%.

As for foreign e-commerce sales revenue in B2C, like domestic enterprises, business tax should be filed every two months, and corporate income tax in May every year. Officials reminded that if foreign e-commerce companies still had B2C income in 2019, they must declare corporate income tax this year.

官員提醒,如果境外電商在2019年有跨境銷售電子勞務給我國境內個人消費者,即使該電商已申請註銷稅籍、今年還是要申報營所稅。

境外電商在我國銷售方式可分成兩種,如果是境外電商直接把電子勞務銷售給消費者個人,即為B2C形式, 但如果是銷售給企業、再轉賣給消費者,則屬於B2B方式。如果是B2B型態,營業稅是以我國商家給付報酬後2個半月內申報,營所稅則式扣繳機制,依照是用淨利率及貢獻度先行扣繳稅款。依照我國「外國營利事業跨境銷售電子勞務課徵所得稅制度」規定。境外電商在報稅時,必須檢附合約、營業項目、境內外交易流程等證明文件供國稅局認定。一般而言,境外平台商淨利率多為30%,而貢獻度則是交易模式判定,如果交易多在我國,貢獻度多半是100%,若有跨國情況,則可能為50%。至於境外電商在B2C銷售收入則與國內企業一樣,都是維持每兩個月申報營業稅與每年5月申報營所稅。官員提醒,如過境外電商去年仍有B2C收入,今年須申報營所稅。

written by Good Earth

Jun 03

Jiangsu - Further Reduction in 5G Usage Price

The Industry and Information Technology Department of Jiangsu recently revealed that 35,000 5G base stations have been built in Jiangsu Province, accounting for 12% of the total in the mainland, with nearly 4 million 5G users. With the increase of 5G users and the reduction of unit costs, the price of 5G usage will be further reduced.

Shanghai - 12 Major Competitions in 2019 Generates Benefits of Over RMB10 billion

According to a report issued by Shanghai, the 12 major sports events held in the city in 2019 brought a total of RMB3.09 billion in direct sales, and the related industry-driven benefits exceeded RMB10.2 billion. Among those, Shanghai ATP Masters 1000, Formula One (F1) China Grand Prix, and Shanghai International Marathon have contributed more than 70% in direct economic benefits.

Sichuan - Announces 13 Supporting Policies and RMB 2 million to Reward R&D

Sichuan announced “Several Measures to Promote Entrepreneurship and Innovation”, launching 13 supporting policies. Incentives will be given to innovative technology R&D achievements of technology-based SMEs based on a standard of not exceeding 40% of R&D expenditure (up to RMB 2 million).

written by Good Earth

Jun 02

The Semiconductor Industry Association (SIA) is asking for $37 billion in federal funding to support the US chip sector. In the midst of the trade war between the US and China, on May 15, TSMC has announced to invest $12 billion on a wafer fab in Arizona. On the same day, the US announced to restrict China’s leading telecommunications company Huawei and its semiconductor subsidiary HiSilicon to use U.S. technology and software.

The Taiwanese government does not currently have a subsidy plan to aid TSMC and boost the semiconductor industry in the current situation. However, for the purpose of improving industrial innovation and optimizing industrial structure, the Statute for Industrial Innovation by Taiwan Ministry of Finance in 2019 provides preferential tax incentives to local industries, including the semiconductor industry.

written by Good Earth

May 19

On 10 December 2019, the Ministry of Finance (MOF) issued Administrative Decree No. 10804651540 providing exemption from CbC reporting for Taiwan entities under a MNE Group headquartered outside Taiwan. The new safe harbor rules prescribe that the Taiwan entity will not be required to submit a CbC report if it meets either one of the following:
• total annual turnover (include operating and non-operating) has not exceeded TWD3 billion, or
• total cross-border controlled transaction amount has not exceeded TWD1.5 billion.

written by Good Earth

May 18

May and June are the peak season for shareholders meetings. National Taxation Bureau of the Northern Area, Ministry of Finance reminded on the 12th that from 2018, companies distributing dividends to overseas individuals or enterprises are subject to a withholding tax rate of 21% in accordance with Taiwan’s income tax law. In addition, as the old system provisions no longer apply, companies are not able to offset half of the undistributed surplus earnings tax.

Withholding tax rates on dividends
Category Year
Before 2018 From 2018
General foreign investment 20% 21%
Countries in agreement with the tax treaty 19 countries including Japan, France, UK, The Netherlands, Belgium, etc. 10%
Malaysia, India 12.5%
Vietnam, New Zealand 15%

Officials have pointed out that before 2018, the withholding tax rate for foreign-funded dividend was 20%, where foreign investments also enjoyed the old system provisions of Article 73-2 of the Income Tax Law. That is, the total dividend already covers 10% of the undistributed surplus earnings tax, where foreign investments can use half of the undistributed surplus earnings tax to offset the deductible tax on the net dividend.

Officials have indicated that, for example, if company A was to pay a total of TWD150 million in dividends to foreign legal person, i.e. shareholder B in 2017, the foreign capital withholding rate for the year was 20%, which is TWD300 million.

In addition, according to the old provisions of the income tax law, TWD150 million in the said year already covered TWD13 million of undistributed surplus earnings tax, therefore, shareholder B can use half of the undistributed surplus tax to offset foreign capital dividend withholding tax of TWD6.5 million (TWD13M / 2), which is equal to shareholder B’s actual withholding tax of TWD293.5 million (TWD300M – TWD6.5M).

However, from 2018, Taiwan has cancelled the policy for foreign shareholders to use half of the undistributed surplus tax to offset foreign capital dividend withholding tax. If company A pays TWD150 million in dividends to shareholder B, shareholder B will be subject to a foreign dividend withholding rate of 21%, therefore, the actual tax withholding is TWD31.5 million (TWD150 million x 21%).

Furthermore, in order to eliminate the double taxation problem, Taiwan has signed comprehensive income tax agreements with 32 countries such as Japan, the Netherlands, and the United Kingdom. The income tax on business profits for companies from either country can be reduced and exempted as long as they apply in advance. The actual tax payable can be effectively saved in accordance with the agreement between the two parties.

The same withholding tax rates apply to Taiwanese business individuals and enterprises in the treaty country and vice versa. For example, the dividend withholding tax rate is 10% for Indonesia, France, United Kingdom, Netherlands, Austria, Belgium, Japan, Denmark, etc. 12.5% for India and Malaysia, and 15% for Vietnam and New Zealand.

Taking French businesses in Taiwan as an example, as long as they apply to the Taiwan National Taxation Bureau for approval, they can use the 10% withholding rate. Taiwan tax authorities will first collect 21% withholding tax from the French businesses and refund 11% tax afterwards.

written by Good Earth

May 18

In response to the COVID-19 pandemic, the Ministry of Finance has extended the tax return period to June 30th this year to reduce the risk of group infections, a first for the country. However, the National Taxation Bureau reminded on the 12th that if enterprises fail to declare corporate income tax within the prescribed time limit, they are liable for a 10% “delayed declaration fee”, and cannot benefit from the loss carry forward tax privilege.

In order to encourage sustainable operation for enterprises, the country’s income tax law stipulates that enterprises can use the losses of the previous decade as a deduction. As many companies need to invest large sums of money in the initial stage of entrepreneurship, considering the severity of initial losses, the country has set up a profit and loss offset method to reduce the burden on enterprises.

However, if an enterprise wants to apply for the loss carry forward tax privilege, their accounting books must comply with the regulations of the Business Entity Accounting Act, and the enterprise’s loss and revenue must be filled with the blue form return or be audited by an accountant. The enterprise must also complete the tax return within the prescribed time period.

Officials have indicated that failure to file a tax return within the prescribed time period, but within 15 days of supplementary filings, enterprises shall be subject to a late surcharge of 10%. Taking this year as an example, the tax filing period is until June 30th. If an enterprise makes a return before July 15th, in addition to the corporate income tax payable, they are also liable for a late surcharge (up to TWD30,000).

If an enterprise delays reporting 15 days after the prescribed time period, using this year as an example, after July 16th, the enterprise will be liable for an additional 20% “delayed declaration fee” (up to TWD90,000) in addition to the assessed tax payable.

Officials have emphasized, if an enterprise files tax return after the prescribed time period, not only can they not benefit from the loss carry forward tax privilege, if there is an under-reporting of taxable income, the National Taxation Bureau may impose a fine of less than three times the amount of tax evaded by the enterprise.

For example, company A had an annual income of TWD3 million in 2018, which can be reported after deducting the previous year’s loss of TWD1 million, which is equal to a taxable income of TWD2 million. Generally speaking, company A only needs to pay TWD400,000 for corporate income tax (2 million x 20%).

However, the accounting staff of company A failed to report within 30 days due to negligence. The National Taxation Bureau determined that company A could not apply for the loss carry forward tax privilege, and the income tax payable was increased to TWD600,000 (3 million x 20%). Officials have pointed out that, according to calculations, the late surcharge was TWD120,000 (600,000 x 20%), but as the legal limit had been reached, and the final penalty was TWD90,000.

written by Good Earth