Taiwan’s National Taxation Bureau of Taipei clarified the income tax treatment of reduced commodity tax refunds for profit-seeking enterprises, covering refunds claimed in the purchase year or the following year.
Taiwan’s National Taxation Bureau of Taipei, Ministry of Finance, stated that refunds of reduced commodity tax obtained by profit-seeking enterprises under Article 11-1, Article 12-5 or Article 12-6 of the Commodity Tax Act should be treated as a reduction in the cost or expense of the purchased goods.
Where the refund relates to goods recorded as a fixed asset, the amount should be deducted from the cost of the fixed asset. Where the goods were recognised as an expense in the relevant year, the refund should be deducted from that expense.
Refunds claimed in a later year
The Bureau explained that different treatment applies where an enterprise applies for the refund in the year following the year of purchase.
For goods originally recorded as a fixed asset, the refund should be deducted from the asset’s undepreciated balance when the refund application is filed. Under Article 52 of the Income Tax Act, depreciation should then continue over the remaining service life based on the book value after the refund has been deducted.
Where the goods were originally recorded as an expense rather than a fixed asset, the refund should instead be recognised as other income in the year in which the refund application is filed.
| Original accounting treatment | Refund applied in purchase year | Refund applied in following year |
| Fixed asset | Deduction from cost | Deduction from undepreciated balance |
| Expense | Deduction from expense | Recognition as other income |
Filing requirements
The Bureau reminded profit-seeking enterprises applying for refunds of reduced commodity tax under the Commodity Tax Act to consider both the appropriate tax treatment and the timing of recognition.
Enterprises should reflect the refund correctly in their profit-seeking enterprise income tax returns to avoid potential adverse effects on their rights and interests.
This announcement was made on 18 September 2026.
