Can sales tax paid for purchase of products/services in order to take part in merchandise shows or engage in temporary business activities in Taiwan be refunded to foreign entities who are considered non-tax residents and have no fix place of business in Taiwan?

In order to benefit our entities who involve business activities offshore, Taiwan tax bureau inclines to say yes to the above question when certain criteria are met.

Nation Taxation Bureau of Taipei, Ministry of Finance further explains that business entities who engage in short term business activities or attend merchandise shows in Taiwan, and are tax residents in Germany, Switzerland, Bahrain, Hong Kong, Kuwait, Macau, Qatar, Saudi Arabia, Australia, Austria, Finland, French, Ireland, Israel, Nederland, UK, Slovenia, Belgium or Liechtenstein will be able to apply for sales tax refund when the following criteria are met.

1.      Entities must have no fix business place in Taiwan, meaning that the foreign entities could not have permanent establishment (“PE”) in Taiwan;

2.      Entities must have official record of business registration or similar certificate in kind in countries mentioned above, and will be able to present such a proof or certificate to the Taiwan tax bureau; entities who are exempted from paying sales taxes in the foreign countries will not be covered under this term;

3.      The county where foreign entities registered must provide benefit in kind to Taiwan entities, meaning Taiwan entities must also be (sales) tax exempted in foreign entities’ mother country;

4.      Cumulated sales tax paid by the foreign entities must amount NT$5,000 during a calendar year, and qualified original related receipts/GUIs/invoices must be procured and be able to be presented to the Taiwan tax bureau.

Regardless of the above, foreign entities who meet all the above criteria but fail to tally with the following requirements will not be able to apply for the sales tax refund either.

1.      Products/services purchased must be used at merchandise shows which foreign entities attend in Taiwan or must be used for foreign entities’ temporary business activities in Taiwan; or

2.      Products/services purchased must be related to foreign entities’ core business activities; or

3.      Products/services purchased must not be used for entertainment or related purposes; or

4.      Products/services purchased must not be used for rewarding individual employee or related purposes; or

5.      Products purchased could not be personal used sedan; or

6.      Sales tax could not be previously refunded in accordance with regulations about “VAT refund claims by foreign travelers purchasing goods.”