The Ministry of Finance on Thursday said it would next week announce plans to levy corporate income taxes on cross-border e-commerce operators in a bid to close loopholes that have allowed international e-commerce firms to evade taxes.
The plan is aimed at multinationals without physical outlets or offices in Taiwan, the ministry said in a statement.
International e-commerce operators often choose not to set up physical branches in overseas markets, but instead run their businesses on digital platforms, which enable them to dodge taxes.
Profits generated by foreign e-commerce companies, which sell services via the Internet or other electronic devices to Taiwanese consumers with the help of local enterprises or residents, should be subject to corporate income tax, the statement said.
The corporate income tax rate for this type of cross-border e-commerce company should be 20 percent, it said.
The levy is to take effect in May and income generated by such transactions this year should also be subject to the levy, it said.
The move marks another step toward preventing tax avoidance, after the ministry earlier this year began imposing a 5 percent business tax on cross-border transactions by e-commerce companies.
Foreign companies supplying e-commerce services to Taiwanese customers with annual sales of at least NT$480,000 are starting in May to be required to apply for business registration certificates and pay business taxes directly or indirectly, regardless of where they are based.
In December last year, the legislature passed an amendment to the Value-Added and Non-Value-Added Business Tax Act (加值型及非加值型營業稅法修正案) that requires international e-commerce operators to register their presence with the tax authorities or face a fine of up to NT$30,000.
The amendments are in line with the OECD’s base erosion and profit-shifting scheme, which aims to prevent tax avoidance by multinationals and resolve cross-border tax disputes.
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