Taiwan VAT: Filing Obligations After VAT Registration Cancellation

December 11, 2024

The Taiwanese Ministry of Finance, specifically the Southern District State Taxation Bureau of the Ministry of Finance, issued a notice regarding the VAT obligations for taxable persons who cancel their VAT registration. In addition to explaining the obligations, the Ministry of Finance states what the fine will be imposed on those who do not comply.

Impact of Canceling VAT Registration

If a taxable person cancels their VAT registration due to a merger, transfer, dissolution, or abolishment of business, the obligation to submit VAT returns remains. Taxable persons must complete and submit a VAT return for the last reporting period before the cancelation.

The VAT return must be submitted to the governing Tax Agency within 15 days from the date the cancellation was completed. If the VAT return is submitted after the 15-day deadline but not more than 30 days, a daily late filing fine of 1% of the due VAT will be imposed on the taxable persons. However, the laws define minimum and maximum daily fines of TWD 1,200 (around USD 37) and TWD 12,000 (around USD 370), respectively.

Should the VAT return be submitted after 30 days from the moment the obligation arose, an additional fine for late filling of 30% of the assessed due VAT will be imposed. The maximum penalty for this breach is TWD 30,000 (around USD 920).

The Ministry of Finance underlined that taxable persons must submit VAT returns even if there were no taxable sales before cancelation.

Conclusion

The notice from the Ministry of Finance serves both as a guide and the remainder of the requirements for taxable persons who, for some reason, had to cancel their VAT registration. Those who fail to follow these rules will have to pay penalties, which will most certainly represent additional financial burdens and some level of inconvenience for them.

Source: Ministry of Finance

What are the VAT obligations for businesses canceling VAT registration in Taiwan?

Businesses must file a VAT return for the final reporting period within 15 days of completing the VAT registration cancellation.

What happens if a VAT return is filed late after canceling VAT registration in Taiwan?

Late filings within 30 days incur a daily fine of 1% of the due VAT, with fines ranging between TWD 1,200 and TWD 12,000. Filings over 30 days late face an additional fine of 30% of the assessed due VAT, capped at TWD 30,000.

Are businesses required to file a VAT return if there were no taxable sales before canceling VAT registration?

Yes, businesses must file a VAT return even if there were no taxable sales during the final reporting period before cancelation.

What are the penalties for failing to file a VAT return after canceling VAT registration?

Penalties include a daily late filing fine of 1% of the due VAT (minimum TWD 1,200, maximum TWD 12,000) if filed within 30 days and an additional 30% fine on the due VAT for filings over 30 days late.

Why is it important to file a VAT return after canceling VAT registration?

Filing a VAT return ensures compliance with Taiwan's tax regulations and avoids financial penalties, which can burden businesses.

Who enforces VAT compliance for businesses in Taiwan?

The Ministry of Finance and its Southern District State Taxation Bureau enforce VAT compliance and issue penalties for non-compliance.

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