Non-profit institutions selling goods or services remain subject to business tax, Taiwan's National Taxation Bureau of the Central Area has said, urging proactive compliance to avoid penalties.
Taiwan’s National Taxation Bureau of the Central Area has clarified how non-profit educational, cultural, public welfare and charitable institutions must report and pay business tax when they sell goods or services, following an enquiry from an unregistered cultural organisation planning a ticketed performance event.
Business tax applies despite non-profit status
Educational, cultural, public welfare and charitable institutions or organisations established or registered with the competent authority for non-profit purposes, as defined under Article 11 of the Income Tax Act, remain subject to business tax when they sell goods or services. This is set out under Articles 1 and 6, Paragraph 2 of the Value-Added and Non-Value-Added Business Tax Act (“Business Tax Act”), the bureau said, responding to a query from a cultural organisation that had not completed tax registration but was planning ticket sales and related merchandise revenue from a performance event.
The bureau explained that the organisational structure and taxation principles applicable to such institutions differ from those governing ordinary profit-seeking enterprises. Their income is divided into two categories: “income related to the purpose of establishment” and “income from the sale of goods or services”. Only the latter is subject to business tax under the relevant provisions of the Business Tax Act.
Reporting procedure for non-recurring transactions
For non-recurring transactions where the organisation has not completed tax registration, business tax must be handled separately for each sale. At the time of delivery or receipt of payment, the organisation is required to complete the five-part “Declaration of Sales Amount and Business Tax Payment Slip for Institutions and Organisations Selling Goods or Services”, known as the 407 payment slip, in accordance with the Table of Time Limits for Business Entities to Issue Sales Certificates.
The accounting and deduction copy of the slip must be provided to the purchaser as an accounting and deduction voucher. By the 15th day of the month following the month of sale, the organisation must pay the business tax at a designated financial institution authorised to collect taxes, presenting the receipt, retained copy and reporting copy. The reporting copy serves as a substitute for the sales amount declaration.
Bureau urges proactive compliance
The bureau reminded non-profit institutions and organisations to comply with business tax requirements whenever they engage in transactions involving the sale of goods or services, and urged them to report and pay business tax proactively to protect their rights and avoid penalties.
This announcement was made on 17 August 2026.
