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Taxation Administration,Ministry of Finance,R.O.C.Law Source Retrieving System of Taxation Laws and Regulations

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Tax Related Directions

Tax Act:
Directions on the Levy of Business Tax and Income Tax on Transactions over the Internet
Content:
Note:
In case of any discrepancy between the English version and the Chinese text of these Directions, the Chinese text shall govern.

Enacted for implementation pursuant to Decree No. Tai-Tsai-Shui-09404532300 issued on May 5, 2005

1.These directions stipulate the levy of Business Tax on the sale of goods or services within the territory of the Republic of China and the import of goods over the Internet, as well as the levy of income taxes on profit-seeking enterprises or individuals operating business over the Internet, pursuant to the provisions of the Value-Added and Non-Value-Added Business Tax Act (hereafter referred as the Business Tax Act), the Income Tax Act, the Assessment Rules of Profit-seeking Enterprise Income Tax, and other related laws and regulations. 

2.The Levy of Business Tax

2.1.Registration fees and management fees collected by the Internet registration agencies for processing domain name and IP address applications: 
(1)Where the aforesaid establishment or its authorized agent have no fixed place of business within the territory of the Republic of China, but the buyers or recipients of the registration services provided by the aforesaid establishment are located within the territory of the R.O.C., the buyers of such services are obliged to declare and pay business taxes on such transactions as stated in the provisions of Article 36 of the Business Tax Act.
(2)Where the aforesaid establishment or its authorized agent have fixed places of business within the territory of the Republic of China, regardless of whether the buyers of such services are located within or outside the territory of the Republic of China, under the provisions of Article 35 of the Business Tax Act, the said establishment is obliged to declare and pay business taxes1 for the sale of services. 

2.2.The sale of goods or services over the Internet by establishments that have acquired duly registered Internet domain names and IP addresses, and thereafter constructed a website, or are renting an Internet store space or applying for membership from an Internet service provider or a broker agency providing other virtual hosting services: 
(1)Online service fees, account processing fees and dedicated hosting service fees collected via Internet online link, for the provision of virtual hosting or added-value services: 
a.A buyer, residing or located within the territory of the Republic of China, of an Internet online link or added-value services rendered by foreign enterprises, institutions, organizations, or associations having no fixed places of business within the territory of the R.O.C, under the provisions of Article 36 of the Business Tax Act, shall declare and pay business taxes.
b.Business enterprises providing Internet online link or added-value services to buyers residing or located within or outside the territory of the Republic of China, having fixed places of business within the territory of the Republic of China, under the provisions of Article 35 of the Business Tax Act, shall declare and pay business taxes; and in cases where services rendered are consistent with Article 7 of the Business Tax Act, the enterprises may attach related supporting documents and declare a “zero tax rate2” for services sold.
(2)Website design and construction fees, platform rentals, merchandise slotting fees or advertisement fees collected from the lessees or members for an online trade platform which assists the lessees or members in selling goods or services:
a.A buyer, residing or located within the territory of the Republic of China, of Internet trade platform services rendered by foreign enterprises, institutions, organizations, or associations having no fixed places of business within the territory of the R.O.C, under the provisions of Article 36 of the Business Tax Act, shall declare and pay business taxes.
b.Business enterprises which have fixed places of business within the territory of the Republic of China, providing Internet trade platform services to buyers or subscribers residing or located within or outside the territory of the R.O.C., under the provisions of Article 35 of the Business Tax Act, shall declare and pay business taxes3. 
(3)Goods ordered over the Internet but delivered to buyers through the normal or actual sales and delivery channels: 
a.Goods sold over the Internet by foreign business enterprises, institutions, organizations or associations having no fixed places of business within the territory of the Republic of China are regarded as imports of goods; thus, the receivers or holders of the imported goods shall pay business tax pursuant to the Article 41 of the Business Tax Act, or apply for business tax exemption, pursuant to Article 9 as applicable.
b.Where goods sold over the Internet by foreign business enterprises, institutions, organizations or associations having fixed places of business within the territory of the Republic of China to the buyer or subscribers residing or located within or outside the territory of the R.O.C., the competent authority shall assess the sales amount and tax payable and issue a payment notice to the seller, according to Article 40 of the Business Tax Act, or the seller shall file a tax return, and pay tax according to Article 35. Goods sold are exempt from the business tax, in the case that the provisions of Paragraph 1 of Article 8 apply, or are zero tax-rated, in the case that the provisions of Article 7 apply. (Supporting documents as required under Article 11 of the Enforcement Rules of the Business Tax Act should be attached to the tax return.) 
(4)Intangible goods ordered over the Internet, rendered via actual marketing or sales channels, or directly downloaded via the Internet and saved into the buyer’s computer equipment for future use, or utilized online (said goods not having been saved into the computer) for audio-visual browsing, voice frequency broadcasting, interactive communication, games or any other goods in digital form:
a.A buyer, residing or located within the territory of the Republic of China, of said intangible goods (services) rendered by foreign enterprises, institutions, organizations, or associations having no fixed places of business within the territory of the R.O.C, under the provisions of Article 36 of the Business Tax Act, shall declare and pay business taxes.
b.Where services are rendered over the Internet by foreign business enterprises, institutions, organizations or associations having fixed places of business within the territory of the Republic of China to the buyer or subscribers residing or located within or outside the territory of the R.O.C., the competent authority shall assess the sales amount and tax payable and issue a payment notice to the seller, according to Article 40 of the Business Tax Act, or the seller shall file a tax return, and pay tax according to Article 35. Services rendered are exempt from the business tax, in the case that the provisions of Paragraph 1 of Article 8 apply, or are zero tax-rated, in the case that the provisions of Article 7 apply. (Supporting documents as required under Article 11 of the Enforcement Rules of the Business Tax Act4 should be attached to the tax return.)

3.Income tax levy regulations

3.1.In the matter of the registration fee and management fee payment collections of Internet registration agencies accepting and processing domain name and IP address registration applications: 
(1)The registration fee and management fee collected for registration services provided by the Internet registration agency, having no fixed place of business or business agent within the territory of the Republic of China, to buyers or recipients located within the territory of the R.O.C. shall be attributed to Republic of China source income under the provisions of Article 8 of the Income Tax Act and be subject to profit-seeking enterprise income tax in accordance with the provisions of Article 3 of the same Act. Where the payer, or the buyer, is a tax withholder as defined under the provisions of Article 89 of the Income Tax Act, and therefore obliged to pay the tax withheld and file withholding certificates under the provisions of Article 88 and Article 92 of the same act. Under these circumstances, the tax filing provisions of Article 71 of the same Act are not applicable. Where the payer, or the buyer, does not qualify as a tax withholder under the provisions of Article 89 of the Income Tax Act, the income earner (the taxpayer) is obliged to voluntarily file income tax returns and pay income taxes pursuant to the provisions of Article 73 of the same Act. Where the taxpayer is unable to voluntarily file income tax returns, then the taxpayer should report such circumstances to the local collection authority-in-charge for approval, as defined in Article 60, Paragraph 2 of the same Act. Moreover, the taxpayer may authorize an individual residing or a business enterprise having a fixed place of business within the territory of the Republic of China to file the said income tax returns as the payer’s proxy or attorney. 
(2)The registration fee and management fee collected for registration services provided by the Internet registration agency, having fixed place of business or business agent within the territory of the Republic of China, to buyers or recipients located within the R.O.C. shall be subject to profit-seeking enterprise income tax in accordance with the provisions of Article 3 of the Income Tax Act and file the annual income tax return and make tax payment thereof in accordance with the provisions of Article 71 and Paragraph 2, Article 73 of the same Act.

3.2.In the matter of incomes generated from the sale of merchandise or services over the Internet by establishments that have acquired duly registered Internet domain names and IP addresses, and thereafter constructed a website, or a seller renting an Internet store space or applying for membership with an Internet service provider or a broker agency providing other virtual hosting services:
(1)For online service fees, account processing fees and dedicated hosting service fees collected via Internet online link, the provision of virtual hosting or added-value services provided; for website design and construction fees, platform rental fees, merchandise shelf rental fees or advertisement fees collected from the lessees or members of the online trade platform for assistance services provided to the lessees or members in merchandise or service sales; for incomes from purchase orders for intangible goods received via the Internet and where thereafter, services were delivered through normal marketing or sales channels, or directly downloaded via the Internet and saved into the buyer’s computer equipment for future use, or utilized online (in the case where the merchandise is not saved into computer) for audio-visual browsing, voice frequency broadcasting, interactive communication, games, or for any other purposes:
a.In the case of the collection of fees by profit-seeking enterprises, educational, cultural, public welfare and charitable organizations or institutions having no fixed places of business or business agents within the territory of the Republic of China or individuals residing outside the territory of the Republic of China, the aforesaid services rendered to buyers located with the R.O.C. territory, such fees collected shall be attributed to Republic of China source income under the provisions of Article 8 of the Income Tax Act and be subject to profit-seeking enterprise or consolidated income tax in accordance with the provisions of Article 3 or Article 2 of the same Act. The payer, or the buyer, under the circumstances qualified as a tax withholder as defined in Article 89 of the Income Tax Act, are therefore obliged to pay tax withheld and file withholding certificates under the provisions of Article 88 and Article 92 of the same Act. Under these circumstances, the provisions for the filing of income tax returns under Article 71 of the same Act are not applicable. Where the payer, or the buyer, does not qualify as a tax withholder under the provisions of Article 89 of the Income Tax Act, the income earner (the taxpayer) is obliged to voluntarily file income tax returns and pay income taxes pursuant to the provisions of Article 73 of the same Act. Where the taxpayer is unable to voluntarily file income tax returns, then the taxpayer should report such circumstances to the local collection authority-in-charge for approval, as defined in Article 60, Paragraph 2 of the same Act. Moreover, the taxpayer may authorize a resident individual or a business enterprise having a fixed place of business within the territory of the Republic of China to file said income tax returns as the payer’s proxy or attorney. 
b.In the case that profit-seeking enterprises, educational, cultural, public welfare and charitable organizations or institutions having fixed place of business or business agent within the territory of the Republic of China or individuals residing within the territory of the Republic of China render the aforesaid services to buyers within the territory of the R.O.C. and collect service fees such institutions shall be subject to profit-seeking enterprise or consolidated income tax in accordance with the provisions of Article 3 or Article 2 of the Income Tax Act.
(2)In the matter of purchase orders received over the Internet and where thereafter, services were delivered through normal marketing or sales channels:
a.In the case that profit-seeking enterprises, educational, cultural, public welfare and charitable organizations or institutions having no fixed place of business or business agent within the territory of the Republic of China sell merchandise directly to buyers located within the territory of the Republic of China via the Internet outside the territory of the R.O.C., and where buyers declare and claim such merchandise directly from the customs, such transactions shall be regarded as a regular international trade transactions, and hence such income shall not be attributed to Republic of China source income.
b.In the case that profit-seeking enterprises, educational, cultural, public welfare and charitable organizations or institutions having fixed places of business or business agents within the territory of the Republic of China sell merchandise directly to buyers located within or outside the territory of the Republic of China via the Internet such institutions shall be subject to profit-seeking enterprise income tax in accordance with the provisions of Article 3 of the Income Tax Act. 
c.Other merchandise sold over the Internet is subject to the related provisions of the Income Tax Act. 
d.Individuals selling apparel, furniture, private cars, or other home items for household use are exempt from income taxes pursuant to Article 4, Paragraph 1, Subparagraph 16 of the Income Tax Act; moreover, such sales are not subject to any business taxes or business profit-seeking enterprise income taxes. 
4.Business registration: Those business entities, including individuals conducting such transactions for profit-seeking purposes through a purchasing and selling approach or otherwise engaged in the business of sale of goods or services over the Internet within the territory of the Republic of China, shall file with the competent authority an application for business registration before commencement of business, .unless they have already processed their business registration matters pursuant to Article 28 of the Business Tax Act and Article 18 of the Income Tax Act, or have been exempted from processing business registration under the provisions of Article 29 of the Business Tax Act. Matters relating to registration shall be followed according to the Regulations of the Business Registration5.
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1.Collection of registration fees and management fees for registration services rendered to buyers within or outside the territory of the Republic of China by Internet registration agencies which are located within the territory of the R.O.C., approved and authorized by the Directorate-General of Telecommunications and having received international organization accreditation to manage .tw class Internet domain names including providing domain name systems operation and related registration management services, shall be considered to be the sale of services within the territory of the R.O.C., and shall be subject to the Business Tax. The said fees collected by foreign registration agencies for rendering services to the buyers outside the territory of the R.O.C. are not subject to the Business Tax of the R.O.C.

2.All fees collected by foreign business enterprises, institutions, organizations, or associations having fixed place of business within the territory of the Republic of China for the provision of Internet online link, virtual hosting or added value services to buyers or subscribers residing or located within and outside the territory of the R.O.C. are regarded as domestic service sales and therefore taxable as provided by law. However, where Internet online or added value services are directly provided by the foreign business enterprise (its parent company) located overseas to buyers or subscribers located outside the territory of the R.O.C., the said services are not subject to the business tax laws and regulations of the R.O.C. 

3.Website design and construction fees, platform rentals, merchandise slotting fees or advertisement fees collected for providing Internet trade platform services to buyers or subscribers residing or located within or outside the territory of the Republic of China are regarded as domestic service sales and therefore subject to business taxes as provided by law. However, where Internet trade platform services are directly provided by the foreign business enterprise (parent company) located overseas to buyers or subscribers located outside the territory of the R.O.C., the said services are not subject to the business tax of the R.O.C. 

4.Where foreign business enterprises, establishments, groups, or organizations do not have a permanent place of business within the territory of the Republic of China, and their overseas enterprise (parent company) directly employs the Internet to sell services to buyers located outside the territory of the R.O.C., the transactions so made are not subject to the business taxes of the R.O.C.. 

5.The Business Registration Regulations as promulgated under the Ministry of Finance Decree of August 12, 2003, Decree No. Tai-Tsai-Shui-0920455500; however, the enforcement rules for such regulations are still pending enactment. Upon enactment, all business registration processing procedures shall be conducted pursuant to the said regulations. 
Visitor:70 Update:2018-04-23
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