VAT and Government Uniform Invoice overview
All sales of goods and services in Taiwan or services are provided in Taiwan and importation of goods into Taiwan is subject to VAT. A business is required to issue Government Uniform Invoice(GUI) to its customers at the time goods or services rendered.
Output VAT is the tax that your customer pays on sales transactions. Input VAT is the tax that you pay on purchase transactions. The amount of VAT payable or overpaid by a company is the difference between the output tax in a tax period and the input tax in the same period. A company, whether or not it has sales, shall file a bimonthly tax return on its sales amount and tax payable or overpaid of the preceding two months together with the competent tax authority prior to the fifteenth day of the following period. For example, the VAT filing due date for January - February period is March 15. The VAT filing due date for March- April period is May 15.
Government Uniform Invoice(GUI) overview
The government uniform invoice (GUI) is a standard VAT invoice. In Taiwan, a VAT-system business entity selling goods or services must issue a GUI to a purchaser at the time of sale, delivery, or receipt of payment, as the case may be. If the purchaser is a business entity, the business tax computed must be stated separately from the sales amount on the GUI. If the purchaser is not a business entity, the business tax does not need to be itemized on the GUI. The GUI issued by a Non-VAT business entity only has to state the sales amount.
Uniform Invoice is a process in which the Taiwanese tax authority issues invoice numbers for every Government Uniform Invoice to track your company's revenue. These Government Uniform Invoice numbers are unique to each GUI and must be used in a two month period.
Five types of invoices are issued in Taiwan. The type is usually determined by the characteristics of the supplier and the customer. This table describes the three Taiwanese invoice types.
Invoices issued to business entities. Three copies are needed for tracking and auditing purposes.
The first copy shall be the retention copy to be retained by the invoice issuer; the second copy shall be the deduction copy to be returned to the purchaser for tax deduction or reduction declarations pursuant to the provisions of the Act; the third copy shall be the receipt copy to be given to the purchaser as an accounting voucher.
Home >> Tax in Taiwan >> Taiwan VAT(sales tax) overview
Invoices issued to individuals or to foreign companies. Two copies are needed.The style of duplicate is like Triplicate GUI expect to only two copies. The first copy shall be the retention copy to be retained by the invoice issuer; the second copy shall be the receipt copy to be given to the purchaser as a receipt. If you sell goods or provide services to foreign companies, you should still issue the duplicate GUI even if your foreign clients may not want it.
(3)Computerized Register GUI:
A business entity uses the computer to record its sales of goods or services.
(4)Cash Register GUI:
Receipts that are printed from cash registers.
Pertain to the GUI issued, transmitted or obtained via the internet or by other electronic means when business entities selling goods or services to a purchaser; there shall be the retention media file, the receipt media file, and the certification media file.
3. Value Added Tax (VAT) overview
Scope of Taxation
Except for entities subject to Non-VAT, all business entities fall within the scope of the VAT system. VAT is levied according to the value-added to goods or services at each stage in the production and distribution chain (see below for a sample calculation of VAT).
The VAT rate is 5%.
Applicable Zero-Rated VAT
The following sales of goods and provision of services are zero-rated:
(2)Services relating to exports or services provided in Taiwan but used in a foreign country;
(3)Goods sold to outbound or transit passengers by duty-free shops established under applicable law;
(4)Goods or services sold to a "bonded zone" business entity for its operational use;
(5)International transportation, although foreign transport enterprises engaged in international transport within the territory of
Taiwan will qualify for the zero tax rate only if reciprocal treatment or an exemption from similar taxes is granted to international transport enterprises of Taiwan by the foreign country in which the foreign enterprise is incorporated.
(6)Vessels and aircraft used in international transportation and deep-sea fishing boats;
(7)Sales of goods and maintenance services to vessels and aircraft used for international transportation and deep sea fishing vessels;
(8)Goods sold by a bonded zone business entity to a taxable zone business entity and exported directly without being transported to the taxable zone;
(9)Goods sold by a bonded zone business entity to a taxable zone business entity for export and placed in a bonded warehouse or logistics center administered by an enterprise inside an FTZ or by Customs.
"Bonded zone" means an EPZ, a science park, an agricultural technology park, or an FTZ approved by the government, or a bonded factory, bonded warehouse, or logistics center administered by customs, or any other designated area approved for establishment by the competent authority in charge of the relevant industry and supervised by customs.
"Bonded zone business entity" is an enterprise inside an EPZ, a science park, an agricultural technology park, or an FTZ that has been approved by the government, and also means a bonded factory, bonded warehouse, or logistics center administered by customs, or an enterprise inside any other designated area approved for establishment by the competent authority in charge of the relevant industry and supervised by customs. "Taxable zone business entity" is a business entity other than a bonded zone business entity.
Refund of Overpaid VAT
The amount of overpaid VAT claimed by a business entity will be refunded after verification by the tax authorities when:
(1)The overpaid VAT is on goods or services subject to 0% VAT;
(2)The overpaid VAT is on purchased fixed assets; or
(3)The VAT overpayment is made by a business entity that has submitted an application for the cancellation of business registration due to a merger, business transfer, dissolution, or cessation of business.
Overpaid VAT resulting from circumstances other than the above may be offset against future business tax payable. Business entities with special situations can request approval from the MOF to receive tax refunds.
Output VAT is the amount of VAT to be collected at the time goods are sold or services are provided. The sales amount is all compensation received from the sale of goods or the provision of services, including any expense reimbursements other than the selling price of goods or services sold.
Input VAT is the VAT paid by a business entity at the time goods or services are purchased.
To qualify for creditable VAT, business entities must maintain the following documents which include their names, addresses and business administration numbers:
GUI specifying the VAT paid on purchases of goods and services.
GUI specifying the amount of VAT issued by the business entity itself in circumstances that are deemed to be sales of goods or services.
Other documentary evidence specifying amounts of VAT and approved by the MOF.
To qualify for creditable VAT, business entities that are permitted to deduct input VAT from output VAT must maintain the following documents that include their names, addresses and business registration numbers:
A GUI specifying the VAT paid on purchases of goods and services.
A GUI specifying the amount of VAT issued by the business entity itself in circumstances that are deemed to be the sale of goods or services.
Other documentary evidence specifying the amount of business tax and approved by the MOF.
Input VAT paid may be credited against output VAT, and if the input VAT exceeds the output VAT (resulting in overpaid VAT), the business entity will have a VAT credit.
VAT returns must be filed bimonthly before the 15th day of the following period and tax due must be paid at that time. The VAT filing date is the 15th day of every odd month; e.g. a VAT return for January and February must be filed and VAT paid before March 15.
Not all GUI you get can be deductible
In any of the following events, a company may not deduct VAT:
(1)The goods or services purchased are not for the use of principal and ancillary business operations.
(2)Goods or services for social relations purposes. The business meal, travel expenses, and accommodation expenses are also not VAT deductible.
(3)Goods or services rewarded to individual employees. Employee benefits, prizes or gifts to employees, staff catering and purchase of main and auxiliary food, are also not VAT deductible.
(4)Passenger cars for personal use, except for business trucks.
(5)The invoices from other countries are not deductible.
(6)Receipts, rent, and salary cannot be deducted, because there is no VAT paid.
It is relevant for your business to comply with the invoicing requirements to prevent penalties. Furthermore, your customer, being the recipient of an incorrect GUI, may experience difficulties reclaiming VAT deduction on the incorrect invoices it received. The specific information that a legit GUI should include:
(1)Date of issuing the invoice
(2)A sequential number that is already printed on a Uniform Invoice
(3)Your company's VAT identification number
(4)The VAT identification number of your customer (if your customer is a company)
(5)Your company name and address as well as the full name of your customer
(6)The product name, quantity, and price of the goods and services
(7)The date the goods were supplied or the services were rendered
Songjer CPA's Tax and Accounting Services:
Bookkeeping and preparation of year-end financial statements
Our bookkeeping activities: From Data entry of your bookkeeping records into accounting software; Reconciliation of bank statements, Accounts Receivables, and Accounts Payables; to Consolidation accounting and preparation of financial statements in accordance with the Financial Reporting Standards in Taiwan.
VAT Registration, filing, compliance services
We help you register your company for VAT through the specific local processes. Our local experts prepare and file the VAT timely and also assist you understanding the regional variations associated with the treatment of transactions and compliance rules. We also support you in maintaining compliance with registration thresholds, Tax taxation filing standards and support for tax inspections.
Corporate tax return preparation and filing
We can assist you with corporate tax filing that mitigates the risks associated with non-compliance. We also support you in maintaining compliance with Tax taxation filing standards and support for tax inspections.
Need support with your taxes?
Songjer CPA can partner with you as your bookkeeper, accountant, business advisor, Tax advisor or your entire Accounting department.
More questions? Let us guide you further
You may find these useful guides in helping you make your decision: