Taiwan’s tax authority has outlined business tax filing and payment requirements for domestic purchasers of cross-border electronic services, including the 5% rate applicable to certain businesses and a TWD 600,000 annual sales threshold for foreign suppliers serving domestic individuals.
Taiwan’s Yuanlin Office of the National Taxation Bureau of the Central Area, Ministry of Finance, has reminded domestic business entities and individuals purchasing cross-border electronic services from foreign suppliers, including Google, Microsoft, Amazon and Apple, of their obligations to declare and pay business tax under the Value-added and Non-value-added Business Tax Act (Business Tax Act) and related regulations.
The Office said business entities purchasing online marketing advertisements, online services or similar services from a foreign supplier, institution or organisation must declare and pay business tax under Article 36 of the Business Tax Act. The applicable tax treatment varies according to the type of purchaser.
For general tax computation business entities, business tax is exempted where the purchased services are used for the sale of taxable goods or services. However, purchasers must report the payment amount in Column 74 of the business tax return within 15 days from the beginning of the next period following the payment of remuneration.
Dual-status business entities must, within 15 days from the beginning of the next period following the payment of remuneration, calculate the business tax payable at the applicable tax rate prescribed in Article 10 of the Business Tax Act, currently 5%, and compute and pay the tax in accordance with the Regulations for the Computation of Business Tax for Dual-Status Business Entities.
Small-scale business entities, organisations and institutions must calculate business tax at the rate prescribed in Article 10 of the Business Tax Act, currently 5%, and pay the tax by filing the Business Tax Payment Form for the Purchase of Foreign Services (Form 408) before the 15th day of the next period following the payment of remuneration.
For domestic individuals, where a foreign supplier sells cross-border electronic services to natural persons within the territory of the Republic of China and its annual sales amount exceeds the prescribed threshold of TWD 600,000 starting from 2025, the supplier must complete business registration under Article 28-1 of the Business Tax Act. The overseas e-commerce enterprise must then issue cloud-based uniform invoices to domestic individuals.
The Office reminded purchasers of cross-border electronic services from foreign suppliers to comply with the relevant regulations. Where business tax has not been duly declared and paid due to negligence, taxpayers may voluntarily file a supplementary return and pay the outstanding tax together with accrued interest to the competent tax authority before any report, investigation or audit conducted by the tax authority or investigators designated by the Ministry of Finance.
In such circumstances, penalties may be exempted pursuant to Article 48-1 of the Tax Collection Act.
