The Ministry of Finance is planning to impose a business tax on cross-border e-commerce operators starting next year in a bid to close a loophole that has allowed foreign e-commerce providers to dodge taxes in Taiwan.
The ministry said it would invite representatives of foreign e-commerce operators — such as ride-hailing provider Uber Technologies; online hotel booking sites Agoda.com and Booking.com; and even US consumer electronics giant Apple — to a meeting on Thursday next week to discuss the tax.
The ministry will also invite accountants and tax experts from the academic sector to map out a policy for the new tax scheme, in the hopes that it can be implemented by next year at the earliest.
According to a survey by research firms Accenture PLC and AliResearch, sales by business-to-consumer cross-border e-commerce activities could rise from just US$230 billion in 2014 to US$1 trillion in 2020.
The compound annual growth rate of global e-commerce over these years is expected to hit 27.4 percent, as more investors jump into the market, the data showed.
However, foreign e-commerce operators, which have made significant revenue by selling commodities or services to Taiwanese consumers, have long been criticized for being exempt from paying taxes in Taiwan.
Since foreign e-commerce operators do not have to set up a physical office in Taiwan, they can easily dodge taxes by running their business through a digital platform overseas.
The National Taxation Bureau of Taipei said that only a handful of foreign e-commerce operators have set up a subsidiary in Taiwan, adding that they tend to claim they just provide services to their parent companies in an attempt to lower their tax burden.
The ministry said that it would push for an initiative that would require foreign e-commerce operators to register in Taiwan and hire a local tax representative to deal with their tax affairs.
The ministry plans to submit a draft amendment to the Value-added and Non-value-added Business Tax Act (加值型及非加值型營業稅法) to the Cabinet next month for approval before sending to the Legislative Yuan to meet its goal of having a new tax scheme in place by next year.
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