National Tax Administration has clarified that input tax on business-organised employee travel cannot be deducted from output tax, though voluntary correction may avoid penalties.
Taiwan’s Taipei National Tax Administration of the Ministry of Finance stated that when a business arranges employee travel to reward staff, the input tax included in the related invoices cannot be declared as a deduction against output tax on 31 October 2025.
The administration explained that when a business organises recreational activities such as employee trips to foster staff relations and internal cohesion, the expenses incurred fall under the category of goods or services provided as remuneration to employees, as specified in Article 19, Paragraph 1, Subparagraph 4 of the Value-Added and Non-Value-Added Business Tax Act (hereinafter referred to as the Business Tax Act). Therefore, the input tax included in the invoices for such expenses cannot be declared as a deduction against output tax.
For example, Company A arranges an employee trip and pays Company B (a hotel) TWD 1,050,000 for accommodation and meals. Since this expense is considered employee remuneration, the input tax included—totalling TWD 50,000 [(TWD 1,050,000 ÷ 1.05) × 5% tax rate = TWD 50,000]—cannot be declared as a deduction against output tax.
If Company A mistakenly declares it as deductible input tax in its current period tax return and it is discovered by the tax authorities, the company will not only be required to pay the additional tax under Article 51, Paragraph 1, Subparagraph 5 of the Business Tax Act but may also face a penalty of up to five times the amount of unpaid tax.
The administration urged that if businesses mistakenly declare input tax for employee travel as deductible against output tax, and the case has not been reported or investigated by the tax authorities or officials designated by the Ministry of Finance, businesses that voluntarily correct the declaration and pay the missing tax may, under Article 48-1 of the Tax Collection Act, have interest applied but avoid penalties.
