International VAT Guide – Taiwan

VAT rates in Taiwan 

How much is VAT in Taiwan? 

The Standard VAT Rate (business value-added tax ) in Taiwan is 5%. 

Some supplies are exempt from VAT. In this group of VAT-exempted sales, we can find the supply of medicines, basic foodstuffs, and land sales. 

The exact list of taxable transactions and allocated Taiwan VAT rate can be found in VAT Taiwan regulations. 

VAT thresholds in Taiwan 

The regulatory framework defining value-added and non-value-added business tax is mainly based on the Business Tax Act and its implementing Decree. In addition to these fundamental regulations, other acts are supplementary and necessary. 

Determining the VAT threshold in Taiwan is one of the initial steps that the vendor should take when assessing his VAT exposure when making supplies defined under the local rules. 

VAT registration threshold for resident businesses: There is no threshold

VAT registration threshold for non-resident businesses: In most cases, there is no registration threshold for foreign businesses with a permanent establishment in the country. 

VAT registration threshold for foreign providers of digital services: The threshold for foreign providers of digital services without a permanent establishment in the country is TWD 480,000, calculated annually.

VAT Taxable Activities in Taiwan

A taxable person, according to the VAT Taiwan regulation, is a legal person or individual who carries out economic activity independently and continuously, regardless of the result of such activity. 

Types of taxable activities that trigger the imposition of Taiwan VAT: 

• The supply of goods and rendering of services in Taiwan for consideration;
• Receipt of services by a taxable person in Taiwan from a foreign provider;
• Export of goods;
• Import of goods.

Other case scenarios exist where domestic or foreign businesses should impose Taiwan VAT on their transactions. 

Tax Representative in Taiwan 

Foreign providers of digital services to customers residing in Taiwan must register for local VAT when their annual turnover surpasses the stipulated threshold of TWD 480,000. The digital providers(independent providers of platform operators) can submit the registration directly or via a tax agent. 

This non-established business is called a “foreign e-commerce operator” (FECO). FECOs can only register for VAT via the eTax portal, an electronic platform established by the Ministry of Finance, either by themselves or by an appointed tax agent.

Tax registration 

Standard Registration 

Domestic or foreign economic operators mandated or eligible to register for tax under the standard rules can submit their application on paper or online after the completion of company registration but before the commencement of their chosen business operation in Taiwan. 

Simplified tax registration 

Foreign providers of digital services without a fixed establishment in the country should follow the steps for mandatory registration, which are defined only through the online registration procedure. The Ministry of Finance monitors this registration, which is performed through the eTax portal, an electronic platform. 

The digital provider can register directly or through a previously appointed tax agent who has the power to act on behalf of the digital supplier. 

VAT on Electronically Supplied Services in Taiwan 

Electronic Services

Non-established economic operators providing e-commerce services(i.e., FECOs) to customers residing in Taiwan are obliged to register for business value-added tax. Registration should be done when the foreign provider reaches the threshold stipulated for this supply type. 

Foreign providers of digital services are obliged to issue electronic invoices(eGUIs), submit bimonthly tax returns, and pay VAT directly or indirectly. 

How much is VAT in Taiwan for Electronically Supplied Services?

VAT rate Taiwan: A standard VAT rate of 5% is applied in most cases on sales of Electronically Supplied Services in Taiwan

E-Commerce VAT Rules in Taiwan 

Non-resident sellers of physical goods aren’t obligated to register for Taiwan VAT if they don’t have a physical presence in the country. The importer of record will levied the 5% import VAT and customs duty.

Online vendors that supply physical goods through the e-commerce platform aren’t obliged to register for VAT. In most cases, the e-commerce platform operator acts as the importer of record and will take care of the VAT compliance requirements for these transactions. 

However, if the online vendor has a physical presence or warehouse in Taiwan and the total value of the imported goods exceeds the threshold of TWD 80,000, it should register for VAT in Taiwan. 

Invoicing Rules

Taiwan has established a specific framework for supporting accounting documents’ format, usage, exchange, and reporting rules. 

Regarding fluctuating invoices, the rules can be distinguished using the invoice type or format as the main parameter. 

Two “main” types/formats of invoices are used in Taiwan. There are “standard” printed invoices called Government Uniform Invoices(GUIs), which are in printed format, and Electronic Government Uniform Invoices (eGUIs). 

E-commerce suppliers of digital services should issue cloud-based invoices to customers residing in the country.

Invoice Requirements in Taiwan 

The invoice should contain at least the following: 

• Date of invoice issuance; 
• The alphabetical letters and numbers of the uniform invoice.

Seller information:

• Company name;
• Full address (head office);
• Billing address if different from company address;
• VAT number.

Customer information:

• Name; 
• Full address;
• VAT number (if applicable);
• Other relevant ID information depending on the invoice type.

Fiscal Information:

• Description and breakdown of the goods or services – quantity, discounts, unit price, excl. VAT;
• Total without VAT;
• VAT amount;
• The VAT rate(s) applied and the breakdown of VAT per rate;
• Invoice Total.

Additional information required in particular cases:

• Exemption reference – guaranteed by precise norm;
• Reverse charge – term if applicable;
• Self-billing – term if applicable;
• Tax Representative information for non-resident business.

Digital Reporting 

E-Invoicing 

The Ministry of Finance and the National Bureau of Taxation are the central institutions that have introduced electronic invoicing and transactional reporting. Adherence to the electronic invoicing system is mandatory for certain economic operators. 

Foreign businesses providing cross-border supply of digital services—These businesses are mandatory to issue standardized electronic invoices for B2C transactions when the place of supply is determined to be within Taiwan. A specific type of e-invoice, developed according to national standards, is a cloud-based type of Government Uniform Invoice. 

These taxable persons(previously registered for Taiwan VAT ID) should digitally report transactional data to the eTax portal of the Ministry of Finance following fixed deadlines. 

Domestic suppliers—Taxable persons whose place of business is in Taiwan and foreign sellers with establishments within the country are not obligated to use e-invoices. 

Taxable persons(domestic or foreign) who don’t have an obligation to adhere to e-invoicing are permitted to register for the system on a voluntary basis for all types of transactions. Once the registration is approved, they must respect the particularities specifically designed for this type of invoicing and transactional reporting. 

Foreign Currency Invoice in Taiwan  

In Taiwan, it’s permissible to issue tax invoices in foreign currencies, but the VAT amount on the invoice and sales amount should be converted to local currency. 

VAT Return in Taiwan 

Standard Return 

Taxable persons not eligible for the simplified return filing should follow the general VAT and accounting rules regarding tax reporting. Most taxable persons must submit a return covering the bimonthly reporting period. 

The return should be submitted by the 15th day following the end of the reporting period, and the payment of owed tax should be handled before submission. 

The submission of the return can be done on paper or electronically.

Standard Taiwan VAT Return 

Penalties for late reporting and omitted declarations 

Taxpayers should charge Taiwan VAT on their transactions when the responsibility rises and submit the VAT return. If they do the return fillings after the deadline, they can expect to allocate more funds than they would if they had filled the return within the permitted time frame. 

If a taxable person makes a late payment, late registration, or erroneous declaration, different types of penalties could be assessed against the non-compliant taxable person. 

Taxable persons registering late for VAT are subject to the greater of the following penalties:

• Penalty of no less than TWD 3,000 and no more than TWD 30,000. 

• Penalty of up to five times the amount of tax evaded.

A taxable person who fails to file the business tax return within the deadlines or the detailed list of GUIs used within the prescribed time limit may be liable to the following penalties:

• If the filing is less than 30 days past due, a surcharge for late filing equal to 1% of the tax payable may be imposed every two days overdue. The surcharge may not be less than TWD1,200 and not more than TWD12,000.

• If the filing is more than 30 days past due, a surcharge for non-filing equal to 30% of the assessed tax payable may be imposed. This surcharge may not be less than TWD3,000 and not more than TWD30,000.

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