The Ministry of Finance on Saturday announced a new system for collecting corporate income taxes from cross-border online operators, which would lower the tax burden of foreign companies registered in Taiwan.
Foreign online business operators formally registered in Taiwan will pay a 20 percent corporate tax on their presumed profits, calculated as 30 percent of their online transactions, which translates into a 6 percent tax on their transaction value, the ministry said.
However, unregistered foreign online businesses will pay 20 percent corporate income tax directly on the value of their transactions, it added.
Many foreign e-commerce operators, such as Facebook Inc and hotel booking site Agoda.com, are registered in Taiwan and are eligible to pay lower taxes under the new scheme, the ministry said.
For example, if a Taiwanese company paid Facebook NT$10,000 to advertise on the platform, the presumed profit will be 30 percent of the amount, or NT$3,000, and the income tax will be 20 percent of that, or NT$600.
Previously, Facebook would have had to pay a 20 percent tax on the entire transaction, or NT$2,000.
The tax incentive is expected to encourage more foreign online business operators to register in Taiwan, the ministry said.
The new tax scheme will be retroactive to Jan. 1, 2016, allowing Facebook, Agoda.com and other foreign online companies that have been registered since that date to file for a rebate on their tax payments for last year, the ministry said.
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