In this day and age of inflation, more and more people have turned to the internet to boost their income by selling goods or labor services, or buy acting as a purchasing agent. However, in practice, there is often confusion between the transaction types of “purchase and sale,” “purchasing agency,” and “collection and payment transfer,” resulting in incorrect invoicing.
In order to help business entities understand the various types of invoicing methods, so as to avoid being penalized for violating the relevant provisions of the Value-added and Non-Value-added Business Tax Act, the National Taxation Bureau of Kaohsiung, Ministry of Finance, further explains as follows:
1. Purchase and sale: If the business entity purchases goods from suppliers in its own name and sells them to customers in order to earn profits from the difference between the purchase and sale, it should issue an invoice to the buyer based on the full price received from the customer.
2. Purchasing agency: If the business entity is entrusted by a customer to purchase goods (“merchandise” or “labor”) from a supplier in its own name and obtains a documentary evidence from the supplier with the business entity as the payer, and the customer pays the price including the price of the goods, handling fee or commission, etc. for the purchase, the business entity should issue two invoices to the principal, one for the price of the goods and marked as purchasing agency, and the other for the purchasing agency fee (i.e. commission or handling fee).
3. Collection and payment transfer: If the business entity is entrusted by the customer to make collection and payment transfer, and there is no difference between the collection and payment transfer, and the buyer of the documentary evidence obtained from the payment transfer is specified as the customer, the documentary evidence can be delivered to the customer (i.e., the principal) and the business entity is exempted from issuing a separate uniform invoice and is exempted from including it in the sales amount.
| Transaction Type | Transaction Method | Invoicing Method |
| Purchase and sale | • The business is conducted by purchase and sale. | • Business entity A buys goods from supplier B for NT$80 and then sells them to customer C for NT$100. • Business entity A issues an invoice for the price of NT$100 and delivers it to customer C. |
| Purchasing agency | • It is entrusted with the purchase of merchandise or labor services. • It receives commission or handling fee (there is a difference between collection and payment). |
• Business entity A is entrusted by customer B to purchase goods at a price of NT$80 from business entity C. In addition to the price of the goods, customer B has to pay a handling fee of NT$20 to business entity A. • Business entity A issues one invoice for the purchase price of NT$80 and indicates that it is purchasing agency. In addition, business entity A issues another invoice for the purchasing fee of NT$20 and delivers both invoices to customer B. |
| Collection and payment transfer | • There is no difference between the collection and payment transfer. • The buyer of the documentary evidence obtained from the payment transfer is specified as the principal. |
• Customer B purchases NT$80 of goods from business entity C and entrusts business entity A to deliver the price on behalf of customer B. Business entity A transfers the NT$80 delivered by customer B to business entity C and obtains documentary evidence with customer B as the payer, and business entity A does not charge any fee from customer B. • Business entity A does not need to issue an invoice, and the documentary evidence obtained from the payment transfer is delivered to customer B. |
The Bureau would like to remind business entities to issue uniform invoices and file business tax returns in accordance with their transaction types. If there is any omission that results in under-reporting of sales, the business entity can apply the penalty waiver only if it automatically reports the omission to the tax authorities and pays the tax before it is reported and investigated by the tax authorities.
Provided by: Sales Tax Division
Contact person: Mr. Kao telephone number: (07)7256600 ext.7330