Business Tax

Business tax (BT) is imposed under two systems, the VAT system and the Non-VAT (special BT) system. Financial institutions, small-scale companies, and certain restaurants are under special BT system. Their sales, based on gross business receipts, are subject to business tax. Business tax under the special BT system is not recoverable, and therefore would be an additional cost of purchase to the buyer. The VAT is levied according to the value added to the services or goods up to the point of each sale, except for the industries in the special BT system. The VAT paid by a local VAT business entity for its business operation basically is creditable to the buyer.

Under the Company Law, a business entity must register with the Ministry of Economic Affairs and other competent authorities before conducting business in the Taiwan. The tax laws also require a business entity to do tax registration for each of its operations having a fixed business location in the Taiwan. However, if a foreign company renders supervision, installation, testing, and other technical cooperation services in the Taiwan. Under a job contract, it may apply to the tax office for exemption from tax registration. For detailed information on registering a business entity, please see the Establishing a Business chapter of this guide.

All sales of goods and services in Taiwan, as well as all import of goods to Taiwan, are subject to business tax.

The definition of sale of goods is the transfer of goods to another entity for a consideration in Taiwan. In addition, any one of the following circumstances shall also be deemed as a sale of goods for business tax purposes:
1. Goods produced, imported or purchased by a business entity for consumption by itself (except for further production) or transferred to another entity for no consideration.
2. The inventories are offset against the liabilities or distributed to sharesholders or partners.when a business entity dissolves or ceases doing business.
3. A business entity purchases goods or imports on behalf of a third party and delivers the goods to the third party.
4. A business entity consigns goods to another entity for sale or sells goods consigned to it by another business entity.

For business tax purposes, a service is considered “sold” in Taiwan if the service is rendered or used in Taiwan.

Any one of the following circumstances shall be considered to be the import of goods:
1. The goods are imported to Taiwan from a foreign country; however, the exceptions are goods imported by export businesses located in duty-free export processing zones, by businesses inside the Science-based Industrial Park, or a bonded factory or bonded warehouse supervised by the Customs (bonded areas).
2. The goods are transported out of bondage from businesses in the above-mentioned bonded areas.

Taxpayers of business tax shall be as follows:
1. Business entities that sell goods or services.
2. The receivers or holders of imported goods.
3. Those who buy services rendered by a foreign company, institution, or organization without a fixed business location in Taiwan. However, if a buyer is under the VAT system and uses these services solely in the production of taxable goods or services, VAT does not apply.
4. The agent of a foreign company engaging in international transportation without a fixed business location in Taiwan.


Government Uniform Invoice (GUI)

Business entities selling goods or services shall issue GUI to the buyer at the time as stipulated in the “Time Limit for Issuing Sales Documentary Evidence”. If the buyer is a business entity, the business tax computed should be stated separately from the sales amount on the GUI. If the buyer is not a business entity, the business tax does not need to be itemized on the GUI.
Types and Uses of Gui
Type and Uses of GUI
Type of GUI Usage
GUI in triplicate When a VAT system business entity sells goods or services to
another business entity (usually business-to-business)
GUI in duplicate When a VAT system business entity sells goods or services to a
non-business entity (usually business-to-consumer)
Cash Register GUI When a VAT system business entity uses a cash register to record its sales of goods or services
Electronic Data Processing (EDP) System GUI When a business entity (in both the VAT and special BT systems) uses EDP system to record its sales of goods or services
Special GUI When a special BT system business entity sells goods or services to
buyers

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