e-Tax alert 90- Taiwan: Revisions to the VAT Act to include foreign e-commerce businesses passed by the Legislative Yuan

e-Tax alert 90

On December 9, Taiwan’s Legislative Yuan completed its third readings of the amendments made by the Taiwan Ministry of Finance (MOF) to the Taiwan VAT regulations by bringing in foreign e-commerce enterprises outside Taiwan selling e-commerce services to domestic individuals to be brought into the Taiwan VAT net. Such foreign enterprises will be required to register and pay VAT in Taiwan.

相關內容

On December 9, Taiwan’s Legislative Yuan completed its third readings of the amendments made by the Taiwan Ministry of Finance (MOF) to the Taiwan VAT regulations by bringing in foreign e-commerce enterprises outside Taiwan selling e-commerce services to domestic individuals to be brought into the Taiwan VAT net. Such foreign enterprises will be required to register and pay VAT in Taiwan.
No other revisions were made by the Legislative Yuan to the draft revisions as put forward and passed by the Executive on September 22. For the analysis on the amendments to the VAT law, please refer to our e-tax alert issue 87 dated October 11, 2016.
The main amendments made to the VAT law are for the purpose of:


  1. Increase the scope of VAT tax payer definition to include foreign enterprises selling cross-border e-commerce services to domestic individuals

  2. Such foreign enterprises should voluntarily or via appointed agents to register for Taiwan VAT and file VAT returns

  3. Insert the penalties for such foreign enterprises and its appointed agents where there is non-compliance of reporting and paying VAT

  4. Amend the references of ‘business registration’ under the VAT law to ‘tax registration’


MOF is currently drafting the related detailed implementation rules as well as building the related IT infrastructure and reporting platform to compliment the execution of the VAT law.
The official date for the implementation of the VAT change has not been announced yet. However, given time is needed to set up the IT infrastructure pending the draft detailed implementation rules are subsequently issued, it is expected that some transitional period will be given for the businesses to respond. Currently, it is estimated that the law may come into effect by 1 May 2017.

KPMG Observations

Further detailed guidance and notices are expected to be given under the draft implementation rules, including but not limited to, the minimum VAT registration threshold, clearer definitions for foreign e-commerce enterprises and electronic services, requirement to issue government uniform invoices etc. Businesses that may be impacted should closely monitor the subsequent announcements and detailed rules to be issued by the MOF in the upcoming months. In the meantime, businesses should self-review its system to evaluate how it could respond and comply with the future reporting and filing requirements. KPMG will continue to monitor and track the developments on the VAT law amendments.

Vivia Huang
Partner, Tax department
Betty Lee
Director, Tax department


e-Tax alert

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