06 Sep 2019 Taiwan Legal Update:Taiwan, Paraguay Tariff Reduction & Tax Update for Profit Seeking Enterprises
Preferential Tariffs Between Taiwan and Paraguay to Take Effect
Preferential tariffs between Taiwan and Paraguay took effect on the 5th of September. According to the Bureau of Foreign Trade (BOFT), Taiwan is to remove or reduce tariffs on 31 categories of Paraguayan products. In return, Paraguay agreed to reduce tariffs on 14 categories of Taiwanese products. This is a continuation of the bilateral economic agreement which took effect in February.
The 14 categories of Taiwanese products include rice noodles, woven fabric products, knitwear and handbags, as well a s a variety of iron, steel, machinery and motors. In turn, Taiwan will allow up to 60,000 tons of tariff-free sugar from Paraguay. Other Paraguayan products that will enjoy tariff-free exemption, immediately or in phases, include pork tendons and mate tea.
Tariff reductions were initially discussed during the first joint committee meeting, held in June 2018, to review the implementation of the Taiwan-Paraguay Economic Cooperation Agreement (ECA). This decision is based on numerous studies which prove that Paraguayan imports have no immediate impact on Taiwanese local businesses.
There is also an opportunity to boost bilateral trade and enhance diplomatic ties. As Paraguay is a member of the Mercosur trade bloc, lower tariffs for products entering Paraguay can facilitate easier access to South American markets for Taiwanese products.
The Ministry of Finance Urges Foreign Profit Seeking Enterprises to File Tax Returns
The National Taxation Bureau of Taipei (NTBT), and The Ministry of Finance (M.O.F.） communicated that foreign profit-seeking enterprises, with neither permanent establishments nor business agents, selling cross-border electronic services and obtaining Taiwanese source income (not within the withholding tax scope) should file income tax returns and execute tax payments. Failing to do so may result in delinquent reporting surcharges.
According to the NTBT, since 2017, foreign profit-seeking enterprises without permanent establishments or business agents selling cross-border electronic services to buyers within Taiwan and obtaining income (not within the withholding tax scope under Article 88 of the Income Tax Act, i.e income derived from B to C transactions) must file profit-seeking enterprise income tax returns and submit tax payments during the declaration period of the taxable year in accordance with Paragraph 1, Article 73 of the Income Tax Act and Article 60 of the Enforcement Rules of the Income Tax Act.
Furthermore, where a taxpayer fails to file an annual income tax return within the prescribed period, the tax authority shall serve a « delinquent notice », requesting the taxpayer to complete an annual income tax return and submit tax payments within 15 days from the date on the notice.
If the taxpayer files the requested income tax return and submits payments within the time limit, the tax authority shall levy a delinquent reporting surcharge amounting to 10%. The amount payable will not exceed NT$30,000 but not be less than NT$1,500.
However, if a taxpayer fails to file an annual income tax return within the time limit, the tax authority shall levy a delinquent reporting surcharge of 20%. In this instance, the payable amount will not exceed NT$90,000 but not less than NT$4,500.
If additional taxation data is discovered prior to the determination of taxable income based on new data or the profit standard of the same trade, the M.O.F shall impose a fine of no more than three times the amount of tax determined as payable alongside tax determined payable in accordance with Paragraph 2, Article 110 of the Income Tax Act.
Finally, the National Taxation Bureau of Taipei (NTBT), and the Ministry of Finance (M.O.F.）urge enterprises who are yet to file income tax returns to do so at their earliest convenience through the eTax Portal.
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