Customs Duty

The customs duty is imposed based on Customs Law and regulations promulgated by the MOF. Basically, ROC customs mechanism, including valuation and classification follows World Trade Organization (WTO) rules. Please link to http://eweb.customs.gov.tw for Tariff Schedule and Tariff Additional Notes.

Duty-paying value is assessed based on the transaction price actually paid or payable by the buyer plus the following elements:
1. Movement costs, such as ocean freight and insurance;
2. Goods or services provided by the buyer for the use of the seller for production or selling the import goods, such as direct and indirect materials, parts, tools, mold, equipment, etc.
3. Engineering, design or other similar services for producing the import goods outside Taiwan; and
4. Royalty or commission paid by the buyer according to the terms of transaction of the import goods.

Where the transaction price of a related-party transaction is affected by the relationship of the transaction parties, the Customs Services could disregard the transaction price in a related-party transaction and assess the duty-paying value of the import goods by applying the following methods:
1. The price of identical or similar goods sold to Taiwan at the time of export, before export or after import of the goods sold in the related-party transaction, with adjustment for differences in terms of sale, quantity, freight, and other factories affecting the price;
2. The resale price in the domestic market to a unrelated third party by deducting the normal profit, selling expenses, taxes and duties, freight, insurance and other related expenses incurred after importation;
3. Production costs of the producer plus movement costs from exporting port to import port; or
4. Best information available to the Customs Services if the duty-paying value could not assess by applying either of above methods.

The customs duty normally is assessed based on the type and function of the goods at the time of import. Were a complete set of machinery, together with all essential equipment used directly with the machinery in the production process, has to be imported in an unassembled and disassembled state, packed separately due to excessive size or for any other reasons, such machinery and equipment shall be liable to duty; duty will be assessed according to their respective tariff classification. However, the importer could request, prior to importation, the Customs for verification and approval to assess a single tariff rate according to the tariff classification applicable to the complete machinery with equipment as one set. To make the single tariff rate application, certain documents, such as the design or engineering blueprint, catalog, etc. should be submitted to Customs for review.

Export and Re-import
Customs duty will be imposed on goods at the time of import. However, where the goods are exported from Taiwan for the purpose of repairing and assembling, when the goods are re-imported, the customs duty could be assessed based on the repairing or assembling expenses. If goods are exported for further processing outside Taiwan, when the completed goods are re-imported, customs duty could be paid only on the value-added of the goods, which represent the difference of the value of goods at the time of export and the value of the goods assessed by the Customs at the time of re-import.

Import and Re-export
Customs duty normally would not be refunded when the import goods is re-exported. However, based on the Customs’ prior approval, dutiable sample; goods used for scientific research, testing, inspection, and exhibition; equipment and tools used for installation or repairing of machinery; container; goods imported for repairing and maintenance, or other goods approved by the MOF could be exempted from customs duty, provided that they are re-exported within six months or the special longer period granted by the MOF.

Extension can be applied before the deadline of the six month period or the special period granted by the MOF.

Lease Equipment
Goods imported under a lease transaction could be subject to customs duty based on the rental or use charges plus movement costs, such as freight and insurance costs from the exporting port to the import port. In this case, the importer should provide a guaranty or bond to Customs based on the duty on full value of the import goods as deposit. If the rental or use charge is determined by the Customs as lower than normal, Customs could assess the rental or use charge based on their investigation. The assessed rental or use charge could not be lower than 10% of the full value of the import goods assessed by the Customs.

Advanced Classification Application
Importer could apply to Customs Office for advanced confirmation of applicable tariff classification of goods to be imported. The Customs Office should grant its reply within 30 days after the application date.

Duty Exemption
Except zero duty rates for certain goods under Taiwan Tariff Table, customs duty could be exempted in the following situations:
Exempted by Customs Law - Article 44 of the Customs Law provides duty exemption privilege for certain goods, such as equipment, instruments, or other necessary articles imported by educational and research institutions for the use of education, research and experiment.
Exempted by Additional Notes of Certain Chapters of Tariff Table -
Certain machinery, equipment, instruments, parts, and accessories could be imported free of duty in according to the Additional Notes of the relevant Chapter of Taiwan Tariff Table. The main features of the duty exemption are:
1. The import goods have no local production;
2. The goods are imported by the qualified manufacturer / technical service industries, rather than by a trading company;
3. The import goods are used for the qualified purposes; and
4. The duty-exemption is approved by competent authorities.

The followings are the key Chapters providing duty-exemption privilege:
1. Chapter 84: Nuclear reactors, boilers, machinery and mechanical appliances, parts, thereof;
2. Chapter 85: Electrical equipment, and equipment and parts thereof;
3. Chapter 87: Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof;
4. Chapter 88: Aircraft, spacecraft, and parts thereof;
5. Chapter 89: Ships, boats and floating structures; and
6. Chapter 90: Optical, photographic, cinematographic, measuring, precision, medical or surgical instruments and apparatus, parts and accessories, thereof.

Based on the Additional Notes of abovementioned Chapters, imported goods used for the following purposes may be qualified:
1. Development of new production, quality upgrading, increase of production achievement of energy conservation, promotion of recycling, or improvement of production techniques;
2. Prevention of air pollution, water contamination, noise or vibration, or for environmental inspection and test or waste disposal;
3. Making agricultural and horticultural machinery for soil preparation or cultivation or for harvesting, threshing, sorting and drying, cleaning machines for seed, grain or leguminous vegetables as well as raw material for manufacturing such parts and accessories (including raw material for making engines);
4. For nuclear research; development, production, safeguard, protection, radwaste management and equipment relating to nuclear power generation;
5. Operational equipment for peace use in nuclear research; development, production, safeguard, protection, radwaste management and equipment relating to nuclear power generation;
6. Automatic machinery or instruments and equipment in complete set imported by registered and qualified livestock raisers to the used for livestock raising;
7. Parts and accessories imported for making marine engine by marine engine manufacturing factories.

Post-clearance Audit
Customs can proceed with post-clearance audit of duty-payers, exporters, and related persons within two years from the date following the release of the imports and/or exports. Depending on the post-clearance audit result, any duty refundable or receivable shall be paid within three years from the date following the release date.

When Customs proceeds with a post-clearance audit, Customs may request the duty-payer, exporter or related person to provide records, documents, account books and/or relevant files or databases regarding the imports or exports, or notify related persons for inquiry at the Customs office, or designate officers to proceed with an investigation at the premises of a responsible person. The person under investigation shall not evade or refuse such an investigation.

When the case for investigation is selected by the Customs, the Customs should inform the entity to be investigated by written notice within six months from the date following the release of the imports and/or exports.

Exempted by Special Laws
Goods may be exempted from duty based on special laws, such as the Statute for Encouragement of Private Sector’s Investment in Transportation Infrastructure Project.

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