Tax Levied on Transfer of Vehicle
According to Value-Added and Non-Value-Added Business Tax Act, business tax, in the form of value-added or non-value-added, shall be levied on the sale of goods or services within the territory of the Republic of China (R.O.C.) and the import of goods. Input tax of vehicle purchased by an enterprise must not be deducted from output tax. When the vehicle is transferred, uniform invoice shall be issued to file business income tax return.
A business entity failed to issue uniform invoices or understated sales amount on uniform invoices, in addition to paying the tax calculated on the basis of the understated or omitted sales amount at the prescribed tax rate, shall be fined 1 to 10 times of the amount of the tax evaded. Business entities found to have committed such violation 3 times within a one-year period shall be suspended from business operation.
Input Tax from Passenger Car Procurement Shall not be Deducted from Output Tax
According to Taiwan tax law, input tax incurred by purchasing passenger car for personal use shall not be deducted from output tax by a business entity. The term “passenger car for personal use” refers to a passenger automobile having not more than nine seats and which is not used for the sale of goods or rendering of services.
If a business entity has used such input tax for deduction from output tax while filing VAT return, the entity must file supplementary report with tax authority and pay deferred input tax. Where the amount of input tax has been falsely reported, the taxpayer shall be pursued for payment of taxes and be fined from one to ten times of the amount of tax evaded. In addition, his business may be suspended.
The Way of Issuing Uniform Invoice for Purchase on Behalf of a Third Party, Consigning Goods to Others for Sale and Collections and Payment Transfer
According to Value-added and Non-value-added Business Tax Act, circumstance that a business entity purchases goods under its own name on behalf of a third party and delivers the goods to the third party, or consigns goods to others for sale or sells the consigned goods shall be deemed as a sale of goods.
1. Purchase on behalf of a third party: Business entities providing purchase agency services shall issue a uniform invoice for the service charges, and shall in addition thereto, issue a separate uniform invoice in the amount of the actual purchasing price for the goods acquired with the words “purchase under agency” indicated, and shall deliver said invoices to the consignor upon delivery of the goods.
2. Consign goods to others for sale: Business entities consigning goods to an agent for selling shall issue a uniform invoice in the amount of the selling price agreed upon by both parties in the contract upon goods delivery and shall indicate “selling under consignment” on said invoice to the business entity engaged for the consigned selling activity as purchase voucher.
Business entities undertaking the selling of the consignments shall issue a uniform invoice in the amount of selling price agreed upon by both parties in the contract to the buyer with “selling under consignment” indicated on said invoice upon conclusion of the transaction.
The business entities undertaking the selling of the consignments as set forth under the preceding paragraph shall issue a uniform invoice and an account settlement statement for the amount of service charges or commissions receivable according to the goods sold and the time limit for settlement of the account stated in the contract and shall indicate the names, quantities, unit prices, total amounts, and selling dates of goods were sold and the numbers of the uniform invoices issued to the consignor. Said account settlement period shall not exceed two (2) months.
3. Collections and payment transfer: If a business entity is entrusted by its customer to collect and transfer payment, it may give the payment receipt to its customer without issuing a uniform invoice or including the amount thus collected in its reported sales, provided there is no difference between the amount collected and paid, and the payment receipt indicates the customer as buyer.
Uniform Invoice must be Issued for Transfer of Remaining Assets or Goods
For transfer of remaining assets with or without consideration at closing of a business entity, uniform invoice must be issued to file business income tax. According to Value-Added and Non-Value-Added Business Tax Act, goods produced, imported or purchased by a business entity for sale but in fact used by itself or transferred to others for no consideration shall be deemed as a sale of goods. Goods used to redeem debt or distributed to shareholders or investors; and stock left over when a business entity is dissolved or shut-down shall also be deemed as a sale of goods. The business entity must issue uniform invoice, otherwise the taxpayer shall be pursued for payment of taxes and be fined from one to ten times of the amount of tax evaded. In addition, his business may be suspended.
Read more...Regulations on Allowance of Utility Fee or Tax Payment for Foreign Employee
From Jan 1, 2009, allowance of utility fee or tax payment for foreign employee, except for those shall not be included in as taxable income of foreign professional based on The Scope of Application for Tax Preferences Provided to Foreign Professionals issued on Jan 8, 2008, must be in compliance with following regulations:
1. Allowance of utility fee, cleaning fee, telephone bill and consumables paid by an entity shall be regarded as subsidy for foreign employee. Such payment must be recorded as payroll expense and income tax shall be levied.
2. In case furniture purchased by an entity for foreign employee has been recorded in inventory list of the entity for depreciation, the expense shall not be included in payroll of employee and no income tax shall be levied.
3. Payment by an entity for income tax or other tax stipulated by Income Tax Act for a foreign employee shall not be recorded as expense or loss of the entity. Such payment is regarded as allowance offered by the entity and income tax of the foreign employee must be levied in accordance with Income Tax Act.
According to terms of The Scope of Application for Tax Preferences Provided to Foreign Professionals, travel allowance to qualified foreign employee and his/her family member, travel allowance for vacation after serving for certain period, relocation fee, utility fee, cleaning fee, telephone bill, rental, maintenance fee or education allowance to children can be recorded as expense of the entity instead of taxable income of the employee. Payment of an entity not in compliance with the scope of application shall be charged a tax at the same level as applied to local employee in accordance with Income Tax Act.
Taiwan Unexpectedly Lowers Interest Rate
Taiwan's central bank unexpectedly reduced interest rates for the first time since 2003, saying the global financial crisis has raised the risk of an economic slowdown. Governor Perng Fai-nan and his board cut the discount rate on 10-day loans to banks by 12.5 basis points to 3.5 percent in Taipei yesterday. Two of 13 economists surveyed by Bloomberg News expected the decision. Ten forecast no change and one a rise.
Perng joins counterparts in China, Australia and New Zealand in lowering rates this month as share markets tumble and the world's economic expansion falters. Central banks globally are trying to ease a credit squeeze as US$523 billion in losses and writedowns tied to a slump in the U.S. mortgage market erode investor confidence and prompt bankers to hoard cash. "Governor Perng is worried about the economy," said Ernest Lee, a bond trader at Mega Securities Co. in Taipei. "He's trying to prevent a recession."
Taiwan's Taiex index has slumped 29 percent this year, more than declines in equity markets in Japan, South Korea and Singapore. The rate decision was released after the close of trading on the Taiwan Stock Exchange which fell 1.2 percent to 6,060.83 yesterday. "The bond and stock markets will have a celebration rally tomorrow" after the rate cut, Mega Securities' Lee said.
Taiwan Stock Market Down
Taiwan Stock Exchange's main index soard at the open but down at the close. Although the main index opened higher today, moving up 34.31 points at 6,095.14 on a turnover of NT$2.73 billion (US$85.32 million), it lowered 131.20 points at the close. The Weighted Price Index was 5929.63 on a turnover of 86.448 billion NT dollars.
Read more...Labor Insurance Fund 'not in a crunch'
The Labor Insurance Fund was neither caught in financial straits nor suffered a liquidity crunch, despite selling NT$30 billion worth of bonds to the Labor Retirement Pension Fund, a top labor official said yesterday. Minister Jennifer Wang of the Council of Labor Affairs (CLA) made the remarks during the Health, Environment and Labor Committee session of the Legislative Yuan.
At the session, some lawmakers asked Wang to explain the Labor Insurance Fund's recent sale of NT$30 billion in bonds to the Labor Retirement Pension Fund, as reported by local newspapers.
Newspapers reported that since the beginning of July, the Labor Insurance Bureau under the CLA has continuously unloaded part of its bond holdings to the Labor Retirement Pension Fund to boost its cash positions to support payment of elderly pension to retired insured workers.
In response, Lawmaker Huang Yi-chiao of the ruling Kuomintang directly asked Wang whether the Labor Insurance Fund will go bankrupt. Wang replied that "It's impossible for any government to allow the labor insurance system to go bankrupt." Wang stressed that the bond sales is a kind of normal fund management by the Labor Insurance Fund in accordance with the rules governing the operation of the Fund. Under the rules, the Fund is authorized to make investment in the local stock and bond markets.
Meanwhile, Wang also told lawmakers that the stock holdings recorded by the Labor Insurance Fund declined by NT$20.5 billion in the first eight months of the year, compared with the same period of last year. Wang cited statistics compiled by the Bureau of Labor Insurance as indicating that the Fund's domestic equity holdings fell NT$15 billion for the period, while its international stock holdings declined NT$5.5 billion, Wang said.
Wang said the filing for bankruptcy by U.S. investment bank Lehman Brothers caused the Labor Insurance Fund to suffer a US$1.2 million loss and the Labor Pension Fund a US$340,000 loss.
In response, Wang said that if all eligible retired labors were to ask for their money from the fund at one time, the fund would fall short by NT$900 billion in making the payments.
However, since the passage in July of the Labor Insurance Annuity scheme, under which retired laborers can choose between receiving their money in one lump sum or in monthly payments, the number of laborers asking for a lump sum payment has gradually declined, Wang said. In July, 40,000 retired laborers received their lump sum payment from the fund, while the number dropped to 28,000 in August, with the amount totaling NT$35 billion, Wang said, adding that the same figures are expected for September.
Noting that the Labor Insurance Fund currently has assets of NT$200 billion, with NT$40 billion in cash holdings, Wang said that making payments to retired laborers in September and thereafter shouldn't pose a problem.
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