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Taiwan VAT foreign digital services; business tax update

Confirmation of business tax to non-resident digital service providers

Taiwan has updated its Value-added and Non-value-added Business Tax law to confirm its Business Tax to certain non-resident providers of digital or electronic services to consumers. This includes “Foreign enterprises, institutions, groups, and organizations that do not have a fixed business place within Taiwan, through the Internet or other digital means”.

Business Tax covers 5% VAT and 2% Gross Business Receipts Tax (financial services and small enterprises). Non-resident digital services providers are subject to VAT if their annual sales exceed TWD 480,000 (approx $15,250).

Feb 2023: new reporting guidance for non-resident providers of digital and electronic services

The Ministry of Finance has issued new details of filing and reporting guidance for offshore suppliers of digital services. The new clarifications include:

  • Definitions on non-resident providers included in VAT obligations
  • VAT and income tax obligations
  • Cloud invoice obligations
  • Tax implications for business taxpayers who buy from non-residents

2017 introduction of VAT on digital services

Taiwan implemented Value Added Tax obligations on non-resident providers and marketplaces for electronic or digital services from 1 May 2017. There is a NTD 480,000 VAT registration threshold for simplified registration, and no requirement to appoint a local Fiscal Representative. Taiwan imposes Government Uniform Invoices (GUI) e-invoice requirements on foreign digital services vendors since January 2020.

The current VAT rate in Taiwan is 5%. Follow VAT Calc’s global VAT and GST on digital services tracker for live updates on worldwide reforms.

What digital services are liable to Taiwan VAT?

Income from the following digital services is liable to VAT:

  • Electronically supplies services steamed or downloaded onto computers and mobile devices
  • Streaming or download media
  • E-books
  • Apps
  • Gaming
  • SaaS or cloud-based software
  • Hosting and domain name services

Determining if Taiwanese VAT is due

Any provider or marketplace must determine if the place of supply is Taiwan under the destination principle.  To demonstrate this, providers may rely of the following evidence:

  • Mobile phone country code
  • Billing address
  • Bank account address
  • SIM card
  • IP address

Foreign e-commerce operator registration and compliance

Non-residents over the VAT registration threshold of NTD 480,000 must register with the Ministry of Finance online via the eTax portal. This includes if the provider anticipates going over this threshold in the next twelve months. This is a simplified registration process, ‘e-commerce operation registration’. There is no obligation to appoint a local VAT agent, but it remains an option.

Electronic VAT returns are then due on a bi-monthly basis. They are due, along with VAT payments, by the 15th of the month following the reporting period.

Electronic platform VAT obligations

Any non-resident electronic platform or similar intermediary selling the service on behalf of a provider will take on the VAT obligations. This will oblige them to follow the  e-commerce operation registration process and file VAT return.

Asia Pacific VAT on digital services

Comments (click for details) Rate Date Threshold Comments
Australia 10% Jul 2017 AUD $75,000
Azerbaijan 12% Jan 2017
Armenia 20% Jan 2022 AMD 115million
Bangladesh 5% - 15% Jul 2019 B2B and B2C
Bhutan 7% Jul 2021 Nu 5million
Cambodia 10% Mar 2022 KHR 250m
China 6%-13% N/a Nil Withholding VAT; B2B and B2C
Fiji 9% TBC FJD 300,000
India 18% Jul 2017 -
Indonesia 11% Aug 2020 IDR600m or 12k customers
Japan 10% Oct 2015 JPY 10 million
Kazakhstan 12% Jan 2022 Nil
Kyrgyzstan 12% Jan 2022 Nil
Laos 10% Feb 2022 LAK 400m
Malaysia 6% Jan 2020 RM500,000
Nepal 13% Jul 2022 Rupees 2m Also 2% DST
New Zealand 15% Oct 2016 NZD 60,000
Pakistan 2% Sep 2021 Nil Marketplace Withholding VAT
Palau 10% Jan 2023 $300,000
Philippines 12% Jan 2024 ? P 3million
Singapore 9% Jan 2020 S$ 100,000
South Korea 10% Jul 2015 Nil
Sri Lanka 18% 2025? LKR 60m Proposals only
Taiwan 5% May 2017 NTD 480,000
Tajikistan 14% Jan 2021
Thailand 7% Sep 2021 1.8m Baht
Uzbekistan 12% Jan 2020 Nil
Vietnam 10% Dec 2020

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