The National Taxation Bureau of the Northern Area (NTBNA), Ministry of Finance stated that the demand for epidemic prevention materials during the Level 3 epidemic alert period has greatly increased. In order to support front-line medical staff and jointly contribute to the work of epidemic prevention, many business entities have been actively donating goods such as protective clothing, goggles, medical masks, fast screening agents, alcohol, and medical facilities. However, business entities should also please take note of the regulations on issuing uniform invoices.
       The NTBNA explained that if a business entity donates anti-epidemic materials to others free of charge, at the time of production, import, and purchase, if it is accounted in the “purchasing” account, and the uniform invoice for the purchased goods has been declared to deduct the output tax of the offset, in accordance with Subparagraph 1, Paragraph 3, Article 3 of the Value-added and Non-value-added Business Tax Act, it shall be deemed as a sale, and uniform invoices shall be issued to the business entity itself at market price. In addition, the stated tax amounts are not allowed to be declared for deductions, except for those made for the support of national defense, provision of morale services to the troops, or contribution to the government. If the business entity has decided to use it as a donation at the time of purchase, and listed it in the relevant account of “donation”, and the input tax paid for the purchase of the goods has not been declared to deduct, it can be exempted from being deemed as a sale of goods and exempt from issuing uniform invoices.
       In an example provided by the NTBNA, Company A purchased 200,000 pieces of medical masks, originally purchased for sale, and entered the account as the purchase account. When buying, the input tax paid is declared to deduct the offset tax amount. When Company A later donates 50,000 of said masks to long-term care institution B, Company A must issue a uniform invoice with the buyer being Company A at market price. The input tax amount of the self-issued uniform invoice cannot be declared to deduct and offset the tax. However, if Company A donates the masks to the local government without compensation to assist in epidemic prevention, although Company A has declared the input tax paid to deduct the output tax at the time of purchase, due to the simplified operation, it can be exempted from being deemed as a sale of goods and exempted from issuing uniform invoices.
       The NTBNA would like to once again remind business entities to issue uniform invoices in accordance with relevant regulations when donating epidemic prevention materials. If the donation is deemed as a sale of goods and the business entity fails to issue uniform invoices, it should declare and pay taxes on its own initiative as soon as possible in accordance with Article 48-1 of Tax Collection Act, prior to investigation by the tax collection authority, in order to avoid the punishment of supplemental tax payment. For questions, please call the toll-free number 0800-000-321 for dedicated service.