Many companies and businesses buy gifts for customers or rewarding employees. The Kaohsiung National Tax Administration, Ministry of Finance stated that, on the festival day (such as the Lunar New Year Festival, Mid-Autumn Festival, etc.), for the business entity’s expenditure on gift-in-nature, such as the meals and gifts for customers or employees, the input documentary evidence obtained by the business entity is assessed to be in the category of social relations purposes or rewarding employees, and in accordance with the provisions of Subparagraphs 3 and 4, Paragraph 1, Article 19 of the Value-Added and Non-Value-Added Business Tax Act (hereinafter referred to as the Business Tax Act), the input tax shall not be deducted from the output tax.

The Bureau stated further that, for the goods produced, imported, and purchased by the business entity, which are not prepared for the use of social entertainment or rewarding employees, but are accounted in the purchase or related expenses accounts, with the input tax having been deducted from the output tax, if the goods produced or purchased are used for social entertainment or rewarding employees instead, they shall be deemed as sale of goods in accordance with the provisions of Paragraph 3, Article 3 of the Business Tax Act, and uniform invoices shall be issued based on the “market price.” 

        
The Bureau specifically reminded business entities that if the input tax of the Input Documentary Evidence for social entertainment or rewarding employees is incorrectly used to claim output tax credit, or if uniform invoices are not issued for goods deemed as sale of goods, the business entity should, in accordance with the provisions of Article 48-1 of the Tax Collection Act, issue uniform invoices, file amended returns, and make supplementary payment of taxes voluntarily as soon as possible, in order to avoid punishment.

If there are any questions, please call the toll-free service number: 0800-000-321, and the Bureau will be happy to provide assistance.

          
Contact: Mrs. Chen, the Officer of the Forth Examination Division

Tel: 07-7256600 ext.7302