Sun, Oct 30, 2005 - Page 2 News List

New Internet tax laws explained by tax department

By Jean Lin  /  STAFF REPORTER

Officials from the Tax Agency of the Ministry of Finance and Democratic Progressive Party (DPP) Legislator Cheng Yun-peng (鄭運鵬) gathered yesterday to clarify new taxation regulations for online auction sites and urged online sellers not to panic over the new policy.

Recent announcements made by the agency, saying that online auction sites were to be taxed starting Nov. 4, caused rumors and misunderstandings regarding the policy to spread online, causing some sellers to panic.

One such rumor was that because commercial taxes would now be applied to online auction sites as they are applied to regular stores, the water, gas and telephone fees of online sellers would increase.

Online sellers do not usually own an actual store but instead work from home. When their online business is taxed, sellers were worried that many of the commercial taxation regulations that apply to stores would also be applied to their homes, including increases in telephone line charges or electricity fees.

Cheng explained that water and gas fees do not vary in households or commercial areas and that telephone and electricity fees may be labeled "commercial usage," but the fees only increase by a small amount if many phone calls are made or too much electricity is used.

According to the Tax Agency's new regulations, the sales tax will only apply when sellers' earnings exceed NT$60,000 (US$1,787). Weng Pei-yo (翁培佑), a specialist from the agency, said that the selling of second hand items or reselling of "useless gifts" does not count as profit-making and therefore taxes would not apply.

Weng Kuo-shang (翁國賢), chief of the Taxation Agency's third division, said that when a seller registers, the agency would first see whether the seller has inventory. If the inventory exceeds one-sixth of the total area of the property, then the commercial tax rate would be applied to both the property and land.

Commercial tax rates will not apply if the registering seller has no inventory, Weng said.

Weng added that once a seller's profits exceed NT$200,000, a 5-percent sales tax will be applied and sellers must provide receipts.

For example, in an apartment of 90m2 (27 ping) with an inventory area of 10m2, the property tax would only increase by about NT$1000 per year after commercial rates are applied, land tax would only increase by NT$320. Together, the seller's taxes would only increase by NT$110 per month on average, Cheng said.

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