Regulations for the Computation of Business Tax for Dual-Status Business Entities
A dual-status business entity applying the direct deduction method shall compute business tax according to the following regulations:
1. The business entity shall classify purchased goods, services, imported goods and services from foreign suppliers into the following three categories according to the use of goods and services and state them clearly in the book:
(1)For use specifically in taxable businesses (including those to which a zero rating applies) as provided in Section 1, Chapter IV of the Act (referred to as "for taxable businesses only").
(2)For use in tax-exempt businesses and businesses where business tax is computed in line with Section 2, Chapter IV of the Act (referred to as "for tax-exempt businesses only").
(3)For use in businesses described in Items (1) and (2) above (referred to as "for common use").
2. The business entity shall use the following formula to compute business tax due or overpaid for the current period:
Tax due or overpaid = Output tax - (input tax - non-deductible input tax pursuant to Paragraph 1, Article 19 of the Act - input tax on goods or services bought for tax-exempt businesses only - input tax on goods or services bought for common use x non-deductible ratio for the tax period)
3. Business tax payable by a dual-status business for purchase of services from a foreign supplier shall be computed by the following formula and shall be filed and paid with the business tax for the current period.
Tax due = Payment for services bought for tax-exempt businesses only x applicable tax rate + payment for services bought for common use x applicable tax rate x non-deductible ratio for the period.
4. At the time of filing the last business tax return for the year, the dual-status business entity shall adjust the tax due based on the non-deductible ratio for the current year, and report the adjusted tax in the last tax return for the current year. The formula is as follows:
(1)Adjusted tax = Input tax already deducted for the year - (input tax for the year - non-deductible input tax pursuant to Paragraph 1, Article 19 of the Act -input tax on goods or services bought for tax-exempt businesses only - input tax on goods or services bought for common use x non-deductible ratio for the current period)
(2)If the dual-status business entity has purchased services from foreign suppliers, the relevant business tax shall be adjusted according to the following formula:
Adjusted tax = (Payment for services bought for tax-exempt businesses only in the current year + payment for services bought for common use in the current year x non-deductible ratio for the current year) x applicable tax rate - business tax already paid for services bought in the current tax year
(3)If a dual-status business entity starts business during the year and its actual operation time in the year is less than nine months, the entity is not required to make a tax adjustment for the year. The entity shall make an adjustment according the provisions herein while filing the last business tax return for the following year.
5. The foregoing article shall apply when a dual-status business entity applies for cancellation of business registration and settles tax owed pursuant to Paragraph 2, Article 30 of the Act.
A dual-status business entity in any of the situations below shall have its tax return examined and certified by a certified public accountant or a tax agent when filing the last business tax return for the year:
(1)The business entity is engaged in manufacturing business.
(2)The business entity's sales for the current year exceed NT$1 billion.
(3)The input tax filed for deduction for the current year exceeds NT$20 million.