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

May 08

The due date for the year of 2019 Income Tax filing and tax payment has been fully extended. The Ministry of Finance has announced the due date will be extended from May 31 to Jun 30. The extension is effective automatically and is applied to every tax payer, Individual as well as business entity, no need to file extension.

written by Good Earth

Apr 14

The global outbreak of COVID-19 has created significant impacts of to individuals or business entities. Taiwan Ministry of Finance has offered some supporting measures to taxpayers, in terms of tax payment and filing. The below is a summary of the measures prepared by Good Earth CPA.

Supporting Measures provided by the Ministry of Finance for COVID-19

A compilation of a few available supporting measures provided by the Ministry of Finance


1. 因疫情隔離政府會主動延長申報及繳稅期限

納稅義務人因嚴重特殊傳染性肺炎而接受隔離治療、居家隔離、居家檢疫、集中隔離或集中檢疫等事由影響,無法於法定期間內完成申報繳納稅捐,本部主動公告延長申報及繳納期限。
Extension for Tax Payment & Filing

Due to severe special infectious pneumonia, taxpayers, who are subject to isolation treatment, home quarantine or centralized quarantine, accordingly, those taxpayers might not be able to prepare and file tax return or pay tax due within the statutory period. Ministry of Finance allows the following extensions.

Tax Category Tax Period Due Date Extension Date
Income Tax 2019 Individual Income Tax May 31, 2020 June 30, 2020
2019 Business Income tax May 31, 2020 June 30, 2020
Income Tax Withheld (Tax Resident) in Feb, 2020 March 10, 2020 March 31, 2020
April 10, 2020 April 30, 2020
May 10, 2020 June 1, 2020
Income Tax Withheld (Non tax Resident) before Jun 1, 2020 Within 10 days after the tax is withheld Within 20 days after the tax is withheld
Value Added Tax March April 15, 2020 April 30, 2020
March and April May 15, 2020 June 1, 2020
For Small Scale Business who pays VAT Quarterly, the first Quarter 2020 May 10, 2020 June 1, 2020
For Small Scale Business who pays by Month April 10, 2020 April 30, 2020
May 10, 2020 June 1, 2020
Commodity Tax, Tobacco and Alcohol Tax and Luxury Tax March April 15, 2020 April 30, 2020
April May 15, 2020 June 1, 2020
Automobile License Tax For the Year 2020 April 30, 2020 June 1, 2020
Property Tax For the Year 2020 June 1, 2020 June 30, 2020

Remarks
展延申報繳納期限屆滿時,仍接受隔離治療者,其申報繳納期限自隔離治療結束之次日起展延20日
When the deadline of the extension expires, the taxpayers are still subject to isolation treatment, home quarantine or centralized quarantine. The declaration and payment shall be extended for 20 days from the day after the end of isolation treatment.

108年度綜所稅將提前退稅
2. 民眾如果以網路申報或於109年5月11日前以人工申報108年度綜所稅,108年度綜所稅第一批退稅案件,將提前一個月於109年6月30日退稅。
If the individual income tax return is filed online or before May 11, 2020. The first batch of Individual Income tax refund for the year of 2019 will be on June 30, 2020, which is one month earlier than normal date of refund.

3. 自109.4.1至109.9.30期間,中央銀行實施調降利率措施
(1)自用住宅貸款:
貸款額度低於1,000萬元部分,加計央行降息1碼及公股銀行減收1碼,共減2碼(0.5%)。
(2)消費性貸款:
信用卡、信貸及車貸等住宅貸款外之貸款,於各行歸戶後1,000萬元以內部分,共減3碼(0.75%)。

Taiwan Central Bank cuts interest rates, interest rate reduction measures for the period from April 1, 2020 to September 30, 2020.
(1) Self-use residential loan:
The amount of the loan amount which is less than TWD10 million, Central Bank will cut interest rates by 0.25% and the government owned bank will cut the rate 0.25%, total interest rate reduced is 0.5%.
(2) Consumer loans:
Loans other than residential loans such as credit cards, credits, and car loans will be reduced by 0.75%, within TWD10 million.

Loan Category Loan Amount More Than TWD10,000,000 Loan Amount Less Than TWD10,000,000
Self-use residential loan N/A Interest Rate reduced by 0.5%
Consumer loans N/A Interest Rate reduced by 0.75%

國有不動產租金得申請展延繳納
4. 嚴重特殊傳染性肺炎防疫期間,國有不動產合法使用人有緩繳租金(含地上權地租、委託經營經營權利金)需求者,109年度按契約約定應繳納租金,得申請展延繳納期限至109年12月底前繳清,期間免計收違約金及遲延利息。
Rental payment for the State-owned property or land can be applied for extension.
During the epidemic prevention period, the rental payment for State-owned real estate for the year of 2020 can apply for the extension of the payment period till the end of December 2020, and all the interest incurred and penalty for overdue will be exempted.

5. 申請延期或分期繳納稅款
納稅義務人受嚴重特殊傳染性肺炎疫情影響且不能於規定繳納期間繳清稅捐者,可向稅捐稽徵機關申請延期或分期繳納稅款。
(1) 延期:延長繳納期限1個月至12個月
(2) 分期:分2期至36期(每期以1個月計算)
Taxpayers infected by Covid-19 is allowed to apply for tax payment extension or payment in installments.
(1) Extension: extend the payment period from 1 month to 12 months
(2) Installments: from 2 installment payments to 36 payments (each installment is calculated in 1 month)

6. 藥用酒精原料及口罩關稅調降減免防疫期間藥用酒精原料關稅由20%調降為10%,口罩由7.5%調降至免稅,為期3個月(實施日期自109年2月27日起至109年5月26日止)。
Import Duty Discount or Free for Medicinal Alcohol or Mask.
From February 27, 2020 to May 26, 2020, the import duty for medicinal alcohol & raw materials was reduced from 20% to 10%, and the Mask is reduced from 7.5% to duty-free.

Product Normal Duty Rate Discounted Duty Rate
Medicinal Alcohol & Raw Materials 20% 10%
Mask 7.50% 0%

7. 健保特約藥局接受政府委託代售配銷之防疫酒精免營業稅
The Sales of Rubbing Alcohol (Isopropyl alcohol or Ethanol) or Mask is free of VAT. 
The Pharmacy, who accepts the commission of the government for the epidemic prevention, the sale of Rubbing Alcohol and Mask are free of Value Added Tax and exempt from issuing Government Uniform Invoices.

8. 健保特約藥局辦理代售口罩自政府取得之款項免徵所得稅
The Sales Revenue of Mask is exempt from Income Tax.
The government subsidy received by the Pharmacy, who accepts the commission of the government for the epidemic prevention, for the sales revenue of mask is exempt from Income Tax.

9.救濟或防疫物資免徵進口稅
(1) 救濟事業之政府機構、公益、慈善團體進口或受贈之物資,進口後無償供公益慈善救濟之用,依救濟物資進口免稅辦法規定,具備救濟物資進口免稅申請書及相關文件,向衛生福利部社會救助及社工司申請進口免稅,經衛生福利部核明轉送財政部核辦,經財政部核可後,免徵進口稅費。
(2) 捐贈防疫物資給政府
本國或外國個人或企業、團體、組織,以自己名義報關進口防疫物資,捐贈我政府機關者,經衛生福利部食品藥物管理署證明係供防疫之用者,免徵進口稅費。

Duty Free for the imported materials or goods which is donated for the purpose of the epidemic prevention.
(1) The epidemic prevention materials, imported or donated by government agencies, public welfare organizations, and charitable organizations and be used for epidemic prevention are free of import duty.
(2) Import and donate the epidemic prevention materials or goods to the government
National or foreign individuals or enterprises, groups, and organizations, who declare customs imported anti-epidemic materials in their own names, donate to our government agencies, and are certified by the Food and Drug Administration of the Ministry of Health and Welfare for epidemic prevention, are exempted from import taxes and fees.

10. 當年度如為虧損可依所得稅法第39條規定於以後10年內盈虧互抵營利事業因疫情影響造成營業收入減少,其營利事業所得稅亦將減少,當年度如為虧損,可依所得稅法第39條規定於以後10年內盈虧互抵 ,減少相關年度應納稅額。
The loss incurred during the year 2020 could be carried forward in the next 10 years.
For a business entity, the loss incurred due to the epidemic, the loss could be carried forward in the next 10 years in accordance with Article 39 of the Income Tax Act.

11. 防疫隔離假之薪資之200%,可自2020年度所得額中減除
嚴重特殊傳染性肺炎防治及紓困振興特別條例第4條,就機關(構)、事業單位、學校、法人、團體給付其員工依規定申請防疫隔離假或依中央流行疫情指揮中心所為應變處置指示而得請假期間之薪資,提供得就該給付薪資金額之200%,自申報當年度所得稅之所得額中減除之租稅措施。
200% of Salary paid for epidemic prevention or quarantine leave is deductible for Business Income Tax purpose. 
A for-profit or non-for-profit entity, who pays its employees for epidemic prevention or quarantine leave, according to regulations or the emergency instructions of the Central Epidemic Command Center, is entitled to deduct 200% of the amount of the paid salary when declare its 2020 Business Income Tax return.

12. 小規模營業人營業稅可以調減
各地區國稅局於中央流行疫情指揮中心成立期間,主動依規定視營業人實際營業情形,覈實調減其查定銷售額及營業稅額。
The Value Added Tax of Small-Scale Business, with monthly revenue less than TWD200,000, could be reduced.
During the establishment of the Central Epidemic Command Center, the regional taxation bureaus took the initiative to verify the reduction of their sales and to reduce Value Added Tax according to the actual business conditions. The VAT rate for Small-Scale Business is 1%.

(A compilation of a few available supporting measures, which we think are practical, provided by the Ministry of Finance)

written by Good Earth

Nov 02

The drafting of a new economic immigration act targets three categories of foreign talent — professionals, mid-level skilled workers, and Taiwanese expatriates and their offspring.

The primary goal of the proposed legislation will be to boost recruitment and retention of mid-level skilled foreign talent in fields like engineering, manufacturing, and information and communication technology.

Mid-level skilled foreign talent is defined under the draft act as overseas students who graduate from high school or vocational school in Taiwan, workers who have been employed in Taiwan for a certain number of years, and technical staff recruited from abroad.

International students enrolled in specific education programs, such as the Overseas Youth Vocational Training School or Industry-University Cooperation Courses designed for youth from Southeast Asian and South Asian countries are also eligible.

written by Good Earth

Aug 03

Article 4

For a foriegn special professional who has met the requirements in the preceding Article, during the first three years starting from the year when he/she for the first time has resided in the R.O.C. for a full 183 days of the year and has had an annual salary income of over NT$ 3 million, one half of the amount of the salary income exceeding NT$ 3 million of each such year may be excluded from the gross amount of consolidated income of the year for the assessment of individual income tax liability, and if he/she has obtained the income set forth in the provisions of Subparagraph 1, Paragraph 1, Article 12 of the Income Basic Tax Act, such income may be excluded from the income basic tax.
The term “first three years” in the preceding paragraph shall start in the year when the foreign special professional for the first time has resided in the R.O.C. for a period of 183 days or longer, and has had an annual salary income exceeding NT$ 3 million. The first three years shall not start in the year when the foreign special professional starts to apply for the tax incentives under Article 9 of the Act in accordance with Article 5 herein.
The term “salary income” in the first paragraph shall refer to the amount of aggregate salaries which may be calculated in gross amount of consolidated income paid by onshore and offshore employers in accordance with the Income Tax Act and other applicable laws for the foreign special professional’s engagement of the professional work under the provisions of Subparagraph 2, Paragraph 1, Article 3 herein.
If a foreign special professional has not resided in the R.O.C. for a period of 183 days or does not have an annual salary income of more than NT$3 million within the three-year period set forth in the first paragraph, the reduction and exemption of the taxes under Article 9 of the Act may be deferred to other employment periods in the R.O.C. for the year when he/she has resided in the R.O.C. for a period of 183 days and when his/her annual salary income exceeds NT$ 3 million. The total number of years eligible for the reduction and exemption of taxes shall be limited to three years.
The term “other employment periods in the R.O.C.” in the preceding paragraph shall refer to the period a foreign special professional was engaged in professional work and the duration of extensions of a foreign special professional approved.
The deferral period mentioned in the fourth paragraph above shall start from the year of the first-time in accordance with the first paragraph and continue without interruptions for a period not over five years.
Link:
https://law.moj.gov.tw/Eng/LawClass/LawAll.aspx?PCode=G0340150

written by Good Earth