Small-scale businesses exempt from issuing uniform invoices must still withhold and report tax on salaries, rent and other income payments, with the Kaohsiung National Taxation Bureau warning that non-compliance may result in penalties.
Taiwan has reminded small-scale businesses exempt from issuing uniform invoices that they must still comply with tax withholding and reporting obligations when paying salaries, rent or other types of income, even if their taxes are assessed by the National Taxation Bureau.
The reminder applies to sole proprietorships and partnerships with monthly sales of less than TWD 200,000 that have been approved as small-scale businesses exempt from issuing uniform invoices. Under Articles 89 and 92 of the Income Tax Act and the Standards of Withholding Rates for Various Incomes, these businesses remain statutory withholding agents and must withhold and report tax on eligible payments.
The Kaohsiung National Taxation Bureau of the Ministry of Finance said many eligible small-scale businesses mistakenly believe that exemption from issuing uniform invoices also exempts them from tax filing obligations. As a result, some fail to withhold or report tax when making income payments and are subsequently penalised.
The bureau cited the example of Ms. Chen, who operates a clothing store as a sole proprietor and is exempt from issuing uniform invoices. In 2023, she rented premises from a resident landlord in Taiwan and paid monthly rent of TWD 28,000. She was required to withhold tax at 10%, or TWD 2,800, from each payment and remit the withheld amount to the national treasury by the 10th day of the following month. She was also required to file the withholding (or exemption) certificates for the previous year by the end of January of the following year. If January includes three or more consecutive national holidays, the filing deadline is extended to 5 February. Because she failed to meet the withholding and reporting requirements, she was required to pay the outstanding tax and the applicable penalties.
The bureau reiterated that businesses of all sizes must fulfil their withholding and reporting obligations whenever they make payments of any type of income. Exemption from issuing uniform invoices does not remove a business’s responsibilities as a statutory withholding agent.
Businesses that identify failures to withhold income tax or submit the required reports should complete the withholding and filing procedures with the competent National Taxation Bureau as soon as possible to qualify for any applicable penalty reduction provisions.
This announcement was made on 7 July 2026.
