VAT Refund in Taiwan | VAT IT

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VAT-registered businesses outside of the European Union are eligible to recover VAT on business costs from VAT Refund in Taiwan | VAT IT under the 13th Directive.

Taiwan’s VAT Rates

Taiwan (also known as the Republic of China) first introduced a value added tax in 1931. The Ministry of Finance has made dozens of amendments to the relevant tax act since its inception. The most recent change occurred in 2017 when Taiwan began applying its 5% VAT to cross-border sales of electronic services.

Taiwan uses the term business tax (BT) to refer to its VAT or value added tax and non-VAT tax schemes. While most business entities fall under the 5% VAT rate, some restaurants, banks, and small businesses are subject to a “non-value-added tax” that ranges from 0.1% to 25%.

Current Rates in Taiwan

In Taiwan, VAT is relatively simple. The tax falls into two categories:

• Standard rate (5%) – Most products and services are taxed at the standard 5% rate.
• Zero rate (0%) – Zero-rated goods and services include exported goods, international transportation, and products or services related to cross-border travel. Additional VAT-exempt items include medical services, pharmaceuticals, basic food and provisions, newspapers, and land.

It’s worth noting that Taiwan’s non-VAT system affects certain business entities, too. Some banks, restaurants, and any other business entity are subject to this non-recoverable tax (which is also called the Gross Business Receipts Tax (GBRT)). The rates are as follows:

• 25% – Saloons, tea rooms, coffee shops, and bars that offer companionship services
• 15% – Nightclubs and restaurants with entertainment
• 5% – Banking, insurance, and “non-core” businesses
• 2% – Purchases of services sold by foreign financial enterprises and “core” businesses
• 1% – Reinsurance premiums of insurance enterprises and businesses servicing the visually impaired

0.1% – Sellers of agricultural products

How to Pay VAT Bill in Taiwan

VAT and non-VAT returns are filed bi-monthly on the 15th day of the month following the tax period. For example, a VAT return covering March and April must be paid by May 15th.

With that said, businesses that fall under the 0% VAT rate may choose to file monthly instead.

To file online, you must first apply for a VAT ID number and password through the Ministry of Finance’s eTax Portal (click “Register as Member”). Once you have a VAT ID number and account, you can file online. When filing your VAT bills online, you can pay via credit card, financial chip card, or bank account transfer. You can also pay in person at a bank or ATM.

If you overpaid and require a VAT refund, Taiwan makes it relatively easy. You’ll apply for a Taiwan VAT refund through the eTax Portal.

Taiwan VAT Compliance

To ensure you remain compliant with Taiwan’s VAT regulations, you must:

• Issue Government Uniform Invoices (GUI) to all purchasers
• Report all data in New Taiwan Dollars (NTD)
• Pay your VAT bill in NTD
• File on time or be subject to a 1% surcharge for every two days in arrears
• Maintain physical records within Taiwan

Filing on time and complying with all requirements can be challenging, especially if you don’t have a tax representative in Taiwan. If you need support, don’t hesitate to contact us for more information.

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Sources:

Laws and Regulations Database of The Republic of China (Taiwan). Value-added and Non-value-added Business Tax Act. https://law.moj.gov.tw/ENG/LawClass/LawHistory.aspx?pcode=G0340080 

Invest Taiwan. Business Tax. https://investtaiwan.nat.gov.tw/showPage?lang=eng&search=60

National Taxation Bureau of Taipei, Ministry of Finance. Tax Payments / Tax Refunds. https://www.ntbt.gov.tw/English/multiplehtml/d1796cd9da724de49d3975f0544f6a7a

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