National Taxation Bureau of Taipei, Ministry of Finance (NTBT) expressed that, recently several foreign enterprises, institutions, associations and organizations (hereinafter referred to as “foreign entities”) have inquired about the possibility of claiming the VAT refunds if they came to Taiwan for engaging in exhibition or temporary business activities and purchased some goods or services with payment of value-added business tax.
NTBT expressed that, to assist our domestic manufacturers in expanding international market and reducing operation cost so as to increase their international competition and conform to the changes of international trade environment, based on the principle of reciprocity, foreign entities, which have no fixed place of business in Taiwan and purchase eligible goods or services over certain amount in one fiscal year during their participation of exhibition or temporary business activities in Taiwan, may apply for the VAT refunds. This principle may enable our domestic business entities to apply for the VAT refunds when they engage in the same activities in the reciprocal countries.
NTBT explained that, based on the regulations of reciprocity, foreign entities from Germany, Switzerland, Bahrain, Hong Kong, Kuwait, Macau, Qatar, Saudi Arabia, Australia, Austria, Finland, France, Ireland, Israel, the Netherlands, the United Kingdom, Slovenia, Belgium, Liechtenstein may apply for the VAT refunds when they engage in exhibition or temporary business activities in Taiwan.
NTBT interpreted that, foreign entities, which apply for the VAT refunds, shall meet the following requirements: (1) no fixed place of business within the territory of the R.O.C.; (2) the business registration or similar business registration has been approved by the competent authority-in-charge in respective country (region). However, if business registration or similar business registration is exempted in accordance with the tax law in that country (region), or no business tax or similar taxes levied in that country(region), this shall not apply; (3) reciprocal treatment or exemption from similar taxes is given to the same institutions of the R.O.C. by the foreign country where they perform the same activities.
NTBT further explained that, the total VAT amount of the purchase receipts a foreign entity, which is qualified for apply for VAT refund, acquired shall reach a minimum of NT$5,000 within one fiscal year (from January 1st to December 31st) during its participation of exhibition or temporary business activities in the R.O.C.. In addition, it shall obtain and preserve the following documentary evidences in the same year: (1) receipt copies of duplicate uniform invoices, cash register uniform invoices, or computer uniform invoices; (2) receipts issued by public utilities, which supply water, electricity, gas, telecommunication, etc.; (3) receipts or ticket stubs issued by the transportation business for taking trains(buses), vessels, aircraft, etc.; (4) a table showing details of shared expenses with the amount of business tax contained therein and the related copies of the original documentary evidence; (5) other documentary evidence specifying the amount of the VAT and approved by the Ministry of Finance.
NTBT also made supplement for the previous explanation that, the foreign entity, which is qualified for applying for the VAT refund, shall purchase: (1) goods or services not for their participation of exhibition or temporary business activities; (2) goods or services not for their use of principle or affiliated business operation; (3) goods or services for social relations purposes; (4) goods or services for reward of individual employee; (5) passenger cars for personal use; (6) the VAT refunds claimed in accordance with the “Regulations Governing VAT Refund Claims by Foreign Travelers Purchasing Goods Eligible for VAT Refund”, shall not be applied for the VAT refunds here again.
NTBT finally pointed out that Ministry of Finance have set a special section called “Exhibitor's VAT Refund System” in the e-Tax Portal (website: http://www.etax.nat.gov.tw). Taxpayers can search the special section for relevant laws/regulations, operating instructions, application forms, and Q & As, and they can also fill out the online application form at the website. Please don’t hesitate to take advantage of this new resource.
(Contact: Mrs. Lai, Section Head of the 4TH Examination Division, Tel: 23113711, ext. 2550)