Taiwan: Foreign VAT reclaim on exhibitions & temporary business
The National Taxation Bureau of the Northern Area, Ministry of Finance, has recently announced a decision to introduce a VAT refund program. This program is focused around promoting more international trade and competitiveness.
Foreign VAT reclaim opportunities have always held lucrative business advantages. However, leveraging these benefits is often tricky when trying to understand the niche requirements and VAT legislation within the country you’re trying to reclaim from.
Taiwan is no exception, and businesses have often been left feeling confused and stuck in a maze of trying to navigate what they are eligible to rightfully reclaim regarding international expenses incurred in Taiwan. Fortunately, we’re here to shed some light on the topic. And just in time, as the Taiwan Ministry of Finance has published a release clarifying the eligibility of foreign entities to claim a refund of value added tax (VAT) paid while engaged in exhibitions or temporary business activities in Taiwan.
Here’s what you need to know.
The foreign refund opportunity in Taiwan
The National Taxation Bureau of the Northern Area, Ministry of Finance, has recently announced clarifications around the VAT refund program. This program is focused around promoting more international trade and competitiveness. Within this program, eligible foreign entities can reclaim the VAT portion paid on goods and services, granted that they meet specific eligibility criteria.
What are the eligibility criteria for foreign VAT reclaim in Taiwan?
Businesses who meet the following eligibility criteria can apply for foreign VAT reclaims in Taiwan:
Foreign entities without a fixed place of business in Taiwan.
Entities must have the proper taxation registration or an equivalent in their home country.
Reciprocal tax treatment or exemptions in the entity's home country.
The VAT refund requirements
As with anything VAT-related, there are additional requirements within the VAT reclaim process that eligible organizations must consider in order to successfully reclaim the VAT on their business expenses in Taiwan. Some of the most significant requirements include the following:
Your total VAT incurred in Taiwan is a minimum of TWD 5,000 within one fiscal year;
You have successfully obtained and preserved the relevant documentation and proof for all purchases made.
Needless to say, ensuring that you don’t lose out on the savings opportunity, means understanding the specific VAT process and obligations. Fortunately, you don’t have to take on the challenge of recovering VAT as a foreign enterprise alone. With VAT IT experts by your side, you can rest assured that you’re well-prepared and equipped to successfully reclaim the VAT on foreign business expenses in Taiwan.
Now although the foreign reclaim process is highly specific to each country, there are some general guidelines you can follow when reclaiming VAT on foreign invoices:
Be sure to accurately store and retain all eligible invoices. Some countries allow backdated reclaims of up to 4-6 years.
All invoices must contain the required supplier information (which may include name, address, VAT registration number, etc.)
Invoices must be made out to your business and not a third party.
The invoicing and reporting process must align with the country-specific reporting obligations, requirements, and deadlines.
Keen to dive a little deeper and learn everything you need to know on claiming VAT as a non-resident? Head on over to our guide where we uncover some of the common misconceptions about foreign VAT and how to recover it successfully.