New rules on information and recordkeeping
In August 2022, Taiwan’s Ministry of Finance amended two regulations regarding VAT for online platforms and apps. These changes are in effect as of 1 January 2023.
The most significant change mainly involves obtaining, storing, and correctly displaying business user information and data. Tax authorities also made additional remarks regarding the professional relationship between online platforms or app providers and their business users.
As of January 2023, taxpayers facilitating the e-commerce process via platforms or apps must retain additional information on business users. As a result, platform and app providers are required to obtain and store the IP addresses of all their business users. In addition, online platforms and apps must ensure that the business’s uniform serial number and entity’s name are visible on online sales pages or any other relevant online applications. Authorities confirm that to implement this, they expect a fair amount of cooperation between platform and app providers and the business user to best retain all relevant records on taxable transactions.
Adapting to the new amendments
While making the necessary adjustments to comply with the latest amendments, online platform operators can expect some leniency regarding compliance. Tax authorities have provided a grace period until 30 April 2023, where they will waive all non-compliance penalties. However, after that, taxpayers can expect to be held liable for penalties if they fail to comply with the requirements.
Registration and compliance for non-residents providers
It’s important to note that any non-resident electronic platform or similar intermediary selling the service on behalf of a provider in Taiwan is subject to taking on VAT obligations. Therefore, they must follow the Taiwanese e-commerce operation registration process and file VAT returns.
Non-residents that sell via online platforms are required to register with the Ministry of Finance online (via the eTax portal). This registration requirement is applicable if non-residents reach the registration threshold of NTD 480,000. This also includes providers who anticipate surpassing the threshold within the next twelve months. When registered, electronic VAT returns are then due bi-monthly, along with the relevant VAT payments, by the 15th of the month following the reporting period.
To confirm the place of supply is Taiwan and whether or not you’re liable to register for VAT, providers can use the following data points from their business users as evidence:
- Mobile phone country code
- Billing address
- Bank account address
- SIM card
- IP address
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