Taiwan’s VAT On Online Retailers Becomes Law
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On December 28, Taiwan’s President Tsai Ing-wen signed into law the amendment to the Value-Added and Non-Value-Added Business Tax Act to impose tax on foreign online sellers’ supplies to Taiwanese consumers.
The amendment is intended to raise additional revenues and level the playing field for Taiwanese bricks-and-mortar retail and service businesses.
The Ministry of Finance is to draw up the required tax regulations and procedures. In addition, it is to establish a website for simplified business registration and for filing VAT returns and paying VAT.
Foreign online suppliers selling cross-border goods and electronic services to end consumers will have to register for tax in Taiwan through a permanent establishment, or appoint a VAT or non-VAT tax representative. The permanent establishment or agent will be required to file the necessary bimonthly tax returns. Significant penalties will be imposed for non-compliance.
Questions & Answers
Q.Which businesses will be affected by this new law?
Which businesses will be affected by this new law?
Foreign online suppliers selling cross-border goods and electronic services directly to end consumers in Taiwan will be subject to the new tax. This aims to create a fairer environment for local Taiwanese businesses.
Q.How will foreign online sellers comply with the new tax rules?
How will foreign online sellers comply with the new tax rules?
They will need to register for tax in Taiwan through a permanent establishment or by appointing a VAT or non-VAT tax representative. This entity or agent will handle bimonthly tax returns.
Q.What is the purpose of this amendment to the tax act?
What is the purpose of this amendment to the tax act?
The amendment is intended to increase government revenues and create a level playing field. It addresses the tax disparity between foreign online retailers and Taiwanese bricks-and-mortar businesses.
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Will this tax level the playing field?
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