The Northern Taiwan National Taxation Bureau has cautioned that when a sole proprietorship using uniform invoices changes its responsible person and transfers inventory or fixed assets, the transaction must be properly invoiced and declared for business tax to avoid penalties under the Business Tax Act.
The Northern Taiwan National Taxation Bureau of the Ministry of Finance has clarified on 13 February 2026 that sole proprietorships that change in the responsible person may trigger business tax obligations if inventory and fixed assets are transferred.
In practice, the bureau said, it is common for businesses to neglect to issue uniform invoices and pay business tax when ownership changes, leading to penalties for tax evasion.
Sole proprietorships do not have legal personality, and although the uniform business number remains unchanged after a change of management, the transfer is effectively a transfer of rights and obligations. Under Articles 3 and 35 of the Value-Added and Non-Value-Added Business Tax Act, the transfer of inventory and fixed assets is deemed a sale of goods, requiring the original owner to issue a uniform invoice and pay business tax based on the market price at the time of transfer. The new owner may declare the input tax shown on the invoice and deduct it from the output tax in accordance with regulations.
The bureau cited an example in which the original owner transferred inventory and fixed assets worth TWD 1.05 million. The seller should issue a three-part uniform invoice showing sales of TWD 1 million and tax of TWD 50,000, and file and pay the tax within 15 days of the transfer. The purchaser may then use the invoice to claim the corresponding input tax deduction.
Businesses are urged to review transaction details carefully when changing the person in charge and to handle tax declarations properly. Voluntary disclosure and payment of outstanding tax and interest before any report or investigation may exempt penalties under Article 48-1 of the Tax Collection Act.
