The National Taxation Bureau of the Southern Area, Ministry of Finance expressed that a foreign enterprise, institution, group, or organization having no fixed place of business within the territory of the R.O.C. (hereinafter referred to as “an offshore electronic services supplier”) selling electronic services to domestic individuals should apply for taxation registration and pay the value-added business tax (hereinafter referred to as VAT). However, domestic business entities, practitioners of profession, groups, or organizations should still file business tax returns and pay VAT when purchasing electronic services from offshore electronic services suppliers.
The Bureau explained that with the rise of the internet and the widespread use of the mobile devices, the frequency of payments to offshore electronic services suppliers in advertisements, online games, video and audio services are sharply increasing. When selling electronic services to domestic individuals, an offshore electronic services supplier shall be the VAT taxpayer, who is obliged to file the tax return and pay VAT in accordance with Article 2-1 of the Value-added and Non-value-added Business Tax Act (hereinafter referred to as “the Act”). Those who are not domestic individuals purchasing electronic services sold by offshore electronic services suppliers, in accordance with Article 36 of the Act, shall, prior to the fifteenth day of the period following the period in which the payment is made, compute the business tax based on the payment amount and pay the tax. In addition, in accordance with the proviso of the same Article of the Act, where the purchaser is a business entity which computes its tax based on the provisions of Section 1 of Chapter 4 of the Act, and the purchased services are used solely in conducting business in taxable goods or services, such services are exempted from the business tax.
The Bureau further expressed that non-personal purchasers of electronic services paying VAT may be divided into two categories.
1. Where the purchaser computes the business tax based on the sales amount and file a VAT return (401, 403, 404), it shall complete the information on such return and pay the tax.
2. Purchasers other than the aforementioned ones (e.g., small business entities, practitioner of profession, group, or organization) shall pay the tax accompanied by a tax payment slip prepared by themselves. The taxpayers are encouraged to download the VAT tax payment slip (408) through the website (https://tax.nat.gov.tw/), or request the tax slip from the competent tax authority.
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