The Dajyh Office, National Taxation Bureau of the Central Area, Ministry of Finance (hereinafter referred to as the Office), stated that domestic business entities, organizations, and institutions purchasing cross-border electronic services from foreign suppliers shall declare and pay business tax in accordance with Article 36 of the Value-added and Non-value-added Business Tax Act (hereinafter referred to as the Business Tax Act).
The Office explained that foreign suppliers selling cross-border electronic services to individuals in the territory of the Republic of China (R.O.C.) whose annual sales amount exceeds the prescribed tax threshold (currently NT$600,000) have been required to apply for tax registration and declare and pay business tax in the R.O.C. since May 1, 2017, and to issue cloud invoices since January 1, 2019. However, when foreign suppliers sell cross-border electronic services to domestic business entities, organizations, or institutions, they are not required to issue cloud invoices. Instead, the domestic purchasers shall declare and pay business tax in accordance with Article 36 of the Business Tax Act.
The Office further explained that where a business entity computes business tax under Section 1, Chapter 4 of the Business Tax Act, and the purchased services are exclusively used for operating taxable goods or services, such purchased services are exempt from business tax. The business entity shall report the amount of remuneration paid in field 74 of the Business Tax Return within 15 days after the beginning of the succeeding period following the payment of remuneration. For dual-status business entities, in addition to reporting the amount of remuneration paid in field 74 of the Business Tax Return, they shall compute and pay business tax in accordance with the Regulations Governing the Computation of Business Tax for Dual-status Business Entities. If the purchaser is an organization or institution, it shall complete the “Business Tax Payment Receipt for Purchase of Foreign Services (Form 408)” and pay the business tax within 15 days after the beginning of the succeeding period following the payment of remuneration.
The Office would like to remind organizations, institutions, and business entities that where they do not compute business tax under Section 1, Chapter 4 of the Business Tax Act, or where the purchased services are not exclusively used for taxable goods or services, they shall declare and pay business tax within 15 days after the beginning of the succeeding period following the payment of remuneration when purchasing cross-border electronic services from foreign suppliers. Those who fail to do so in accordance with the regulations are advised to voluntarily declare supplementary returns and pay the tax due as soon as possible.
If you have any questions, please call the toll-free service number 0800-000321 for consultation, and we will do our best to serve you.
Contact person: Dajyh Office, Sales Tax Section, Ms. Liang
Tel: (04)2261-2821 ext. 314.