The National Taxation Bureau of the Southern Area, Ministry of Finance expressed that a foreign enterprise, institution, group, or organization having no fixed place of business within the territory of the R.O.C. (hereinafter referred to as “an offshore electronic services business entity”) and selling electronic services to domestic individuals should apply for taxation registration from May 1st, 2017. However, the domestic business entities should still file business tax returns and pay the tax when purchasing electronic services from offshore electronic services business entities.
The Bureau explained that in accordance with Article 2-1 of the Value-added and Non-value-added Business Tax Act (hereinafter referred to as the “Act”), when an offshore electronic services business entity selling electronic services to domestic individuals within the territory of the R.O.C.,it shall be the taxpayer of the business tax and file a tax return and pay VAT. A domestic business entity purchasing electronic services sold by an offshore electronic services business entity, in accordance with Article 36 of the Act, shall, prior to the fifteenth day of the period following the period in which the payment is made, compute the business tax based on the payment amount and pay the tax. In addition, in accordance with the provisos of the same Article of the Act, if the purchaser is a business entity which computes its tax based on the provisions of Section 1 of Chapter 4 of the Act, and the purchased services are used solely in conducting business in taxable goods or services, such services are exempted from the business tax.
The Bureau reminds taxpayers that, a business entity should file and pay the business tax in accordance with relevant regulations. A business entity who violates the Act should voluntarily file a supplementary tax return and make a supplementary payment for the amount of tax due before it is reported by informants or investigated by the tax collection authorities in order to avoid punishments.