Foreign e-commerce operators might soon have to pay business taxes for their sales in Taiwan after participants at government-sponsored meetings all lent support to draft regulations to oversee the industry, the Ministry of Finance said yesterday.
The ministry is to draw up a bill by the middle of next month that would require cross-border e-commerce operators to register in Taiwan if their annual revenues meet a taxable threshold, National Tax Administration Deputy Director-General Joan Wang (王?忠) said.
“All the firms expressed their willingness to comply with Taiwan’s tax rules,” Wang said, adding that representatives from ride-hailing provider Uber Technologies Inc and US consumer electronics giant Apple Inc took part in the final meeting yesterday.
The ministry has organized five meetings on the issue and welcomes more participation from interested parties when the changed tax regulations go into operation, Wang said.
The ministry has yet to set the taxable thresholds. Under current rules, domestic operators must submit tax statements if their monthly sales exceed NT$80,000 and service charges surpass NT$40,000.
Many participants agreed that the threshold should be the same for onshore and offshore operators, Wang said, adding that the taxable base is likely to be set at NT$480,000 in terms of annual revenue.
According to a survey conducted by research firms Accenture PLC and AliResearch, cross-border business-to-consumer e-commerce could grow from an industry worth US$230 billion in 2014 to US$1 trillion in 2020.
That would translate into a yearly compound growth rate of 27.4 percent for global e-commerce, the survey showed.
However, foreign e-commerce operators, which have gained significant revenue by selling products or services to Taiwanese consumers, have long been criticized for failing to pay taxes in Taiwan.
Because foreign e-commerce operators do not have to set up a physical office in Taiwan, they can dodge taxes by running their business through a digital platform overseas.
Only a handful of foreign e-commerce operators have established companies in Taiwan and they claim they just provide services to their parent companies to lighten tax burdens.
“The ministry will make the issue its top priority for the fall legislative session so the levy might be put into place next year,” Wang said.
Foreign e-commerce operators might hire local accounting firms to help with registration and taxation issues, she said.
When the proposed tax passes the legislature, there should be a grace period during which e-commerce operators would be free from penalties, tax official Weng Pei-yu (翁培祐) said.
It is up to the Cabinet to decide the length of the grace period and other technical details, Weng said.
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