Taiwan’s Southern Region National Taxation Bureau clarified when businesses could apply the zero business tax rate to overseas orders, stressing that goods must meet statutory export requirements and that foreign currency payments alone were insufficient.
Taiwan’s Southern Region National Taxation Bureau of the Ministry of Finance has clarified that businesses receiving orders from overseas customers must meet specific export requirements to qualify for the zero business tax rate. An overseas order or payment in foreign currency does not automatically make a transaction eligible for zero-rating.
In a notice issued on 10 November 2026, the bureau explained that the applicable business tax treatment depended on the business entity’s tax status and whether the goods were actually exported in accordance with the relevant regulations.
Businesses using uniform invoices must generally report their sales for each tax period and deduct input tax from output tax to calculate the business tax payable or overpaid. Where these businesses export goods in compliance with the applicable requirements, the zero business tax rate may apply.
Small-scale business entities, however, are generally taxed based on sales figures assessed by the tax collection authority rather than the difference between input tax and output tax. Consequently, the zero business tax rate does not currently apply to their exports.
The bureau referred to Article 7 of the Value-added and Non-value-added Business Tax Act, under which the zero rate applies only when the statutory requirements for exported goods are satisfied.
To illustrate the rules, the bureau cited the example of Company A, which uses uniform invoices and receives an order from an overseas customer for a batch of goods. If Company A exports the goods abroad and fulfils the statutory requirements, the transaction qualifies for the zero business tax rate.
However, the tax treatment differs if the overseas customer instructs Company A to deliver the goods directly to a third party within Taiwan’s domestic taxable area for use there. In this case, the goods are not actually exported. Therefore, the zero rate does not apply, even if the buyer is a foreign company and payment is made in foreign currency.
The bureau advised businesses to verify their tax status and the actual export arrangements when handling overseas orders. It also urged them to retain relevant export documents and file business tax returns based on the actual circumstances of each transaction.
Businesses that incorrectly apply the zero rate could underpay business tax and become liable for additional tax assessments and penalties.
