National Taxation Bureau of Taipei, Ministry of Finance (hereinafter referred to as the NTBT) expressed that foreign profit-seeking enterprises selling cross-border electronic services (hereinafter referred to as foreign profit-seeking enterprises) to domestic individuals and obtaining income not within the withholding tax scope under Article 88 of the Income Tax Act in 2020 shall file income tax return and make payment in accordance with the regulations by themselves or through tax agents within the period from May 1 to May 31 ,2021.
NTBT explained that for the convenience of the foreign profit-seeking enterprises to file income tax return, bilingual language (Chinese and English) “Tax on Cross-Border Electronic Services” has been established on the eTax Portal, Ministry of Finance (website： https://www.etax.nat.gov.tw). The foreign profit-seeking enterprises should file income tax returns for the taxable year 2020 at “eTax Portal, Ministry of Finance/ Tax on Cross-Border Electronic Services/ Profit-Seeking Enterprise Income Tax” and make tax payments during income tax declaration period.
NTBT pointed out that the foreign profit-seeking enterprises should beware of the following when filing income tax returns for the taxable year 2020：
1. Those who file their Profit-Seeking Enterprise Income Tax returns for the first time should go online to the “eTax Portal, Ministry of Finance/ Tax on Cross-Border Electronic Services/ Profit-Seeking Enterprise Income Tax” and apply for Qualifications Registration. Certificate of Registration or Permission of its original jurisdiction or authorities of the foreign profit-seeking enterprise should be uploaded. Power of attorney and letter of commitment should also be uploaded if apply by a tax agent. After receiving and reviewing the above-mentioned applications, the tax authorities will issue Notice of Acceptance via E-mail. To file Profit-Seeking Enterprise Income Tax returns, foreign profit-seeking enterprises and their tax agents should log on to the “Profit-Seeking Enterprise Income Tax” section and apply for their own account numbers and passwords online after receiving such notice. The account numbers and passwords applied previous year are still valid for foreign profit-seeking enterprises who had filed their returns previous year. Reapply for a new set is not required.
2. It is not necessary to apply for a separate set of account number and password if the foreign profit-seeking enterprises have had applied for Business Registration and obtained a set of account number and password for filing Business Tax. The same set of account number and password can be used for filing both Business Tax and Profit-Seeking Enterprise Income Tax returns. Power of attorney and letter of commitment should also be uploaded if filing Profit-Seeking Enterprise Income Tax returns by a tax agent. Under such circumstance another set of account number and password should be applied after receiving Notice of Acceptance.
3. To calculate taxable income, foreign profit-seeking enterprises are able to apply for the net profit ratio of its major business items of the same trade or the domestic contribution ratio according to Explanatory Decree No.10604704390 issued by the Ministry of Finance on January 2, 2018. “Application Form for the Net Profit Ratio and Profit Contribution Ratio Applicable to Sale of Cross-border Electronic Services of Foreign Enterprise” should be submitted and supplementary documents such as copy of the contract, major business item and relevant documents that can specifically divide the relative contribution ratio between onshore and offshore transaction flows to the total profit should be provided together with Profit-Seeking Enterprise Income Tax returns or apply separately.
4. If the residence of the foreign profit-seeking enterprise locates in a country that has signed a comprehensive Double Taxation Agreements with ROC, and the enterprise does not constitute any permanent establishment within the territory of ROC or does not carry on selling electronic services by the internet or other electronic devices to domestic individuals through permanent establishments, the enterprise may, or appoint an agent to, submit “Application Form for a Foreign Profit Seeking Enterprise Performing Cross Border Sales of Electronic Services to Exempt its Business Profits from Tax under an Agreement for the Avoidance of Double Taxation” and supplementary documents such as the Resident Certificate issued by the tax authority of the resident country, copy of the contract, power of attorney and documents related to information of the source revenue , the tax relief can be applied together with filling Profit-Seeking Enterprise Income Tax returns or apply separately.
5. The foreign profit-seeking enterprises should complete information of remittance in accordance with “Introduction to Profit-Seeking Enterprise Income Tax Payments via Designated Bank Accounts for Foreign Profit-Seeking Enterprise selling Cross-Border E-Services” when remitting Enterprise Income Tax payments. Full-amount payments should be remitted to the NTBT 301 bank account of Bank of Taiwan, Cheng Chung Branch before due date of the tax payable. It is suggested that foreign profit-seeking enterprises to contact Bank of Taiwan, Cheng Chung Branch (BKTWTWTP045) by telegram (SWIFT Message type: MT103) and inquire about the equivalent tax amount through the financial institutions of their own countries or regions. Cheng Chung Branch of Bank of Taiwan will advice the currency exchange rates and relevant service charges or other expenses before foreign profit-seeking enterprises remit payments as directed.
6. A late payment surcharge of 1% of tax payable will be levied every two days for up to 30 days if the tax payment is not made before deadline(to be postponed to the day following a legal holiday in the case that the original deadline is a legal holiday) . Interest of the tax payable will be imposed from the first day after the 30-day late payment surcharge collection period if the overdue tax payment is not made after 30 days. It is calculated on a daily basis at the fixed interest rate of postal savings one-year term deposit set for January 1 of each year.
NTBT reminded that foreign profit-seeking enterprises can make good use of relevant tax information or application form which can be downloaded from the “Tax on Cross-Border Electronic Services/ Profit-Seeking Enterprise Income Tax/Laws & Regulations or Download Document and File” section on the eTax Portal, Ministry of Finance.
(Contact：Miss. Tsao, Section Head of the First Examination Division; Tel:02- 2311-3711 ext.1337; E-mail: email@example.com)