Taiwan VAT Threshold Increase: Impact on Non-Resident Digital Service Providers

Q: What is the proposed new VAT threshold for non-resident digital service providers in Taiwan?

The proposed VAT threshold is TWD 600,000 (approximately USD 18,100), an increase from the current threshold of TWD 480,000.

Q: When will the new VAT threshold come into effect?

The new VAT threshold will apply once the proposed amendments are officially adopted and published.

Q: Who is affected by the proposed VAT threshold increase?

All non-resident entities providing digital or electronic services to consumers in Taiwan, including institutions and organizations without a fixed establishment in Taiwan, will be affected.

Q: What is the deadline to submit comments on the proposed VAT changes?

The deadline for submitting comments on the proposed VAT amendments is February 24, 2025.

Q: Do non-resident digital service providers need to register for VAT under the current rules?

Yes, non-resident providers must register, charge, and remit VAT if their turnover exceeds the current threshold of TWD 480,000.

Q: How should foreign service providers prepare for the proposed VAT changes?

Providers should monitor developments, assess their annual turnovers, and ensure compliance by registering for VAT if they meet or exceed the applicable threshold.

January 15, 2025

The Taiwanese Ministry of Finance opened a 60-day consultation period regarding the VAT amendments to the Finance and Tax Order draft. All interested parties can comment on the proposed amendments, which include increasing the VAT threshold for non-resident digital service providers. The due date for submitting comments on proposed amendments to the Value-added and Non-value-added Business Tax law is February 24, 2025.

Impact on Non-Resident Digital Service Providers

Under the proposed rules, foreign businesses that provide digital or electronic services to consumers in Taiwan will have to register for VAT once they exceed the new threshold of TWD 600,000 (around USD 18,100). This is an increase of TWD 120,000 (around USD 3,600) from the current threshold of TWD 480,000 (around USD 14,500).

Once officially adopted and published, new rules will apply to all non-resident entities, including any institution, organization, or other entity that has no fixed establishment in Taiwan and makes supplies to Taiwanese consumers through the Internet or other digital networks.

Until the new threshold comes into effect, all non-resident taxable persons involved in the supply of digital services exceeding the currently effective TWD 480,000 threshold must register, charge, collect, and remit VAT and file VAT returns.

Conclusion

The change in the VAT threshold resulted from the Ministry of Finance's decision to increase the monthly business tax threshold for sales of digital services by non-resident providers to Taiwanese consumers from NTD 40,000 to NTD 50,000, enacted on January 1, 2025.

All foreign service providers should monitor further developments related to this change and comment on the proposed changes if necessary. In addition, all taxable persons subject to these rules should evaluate their annual turnovers and determine whether they must register for VAT in Taiwan regardless of the outcome of the proposed changes.

Source: Deloitte, Bloomberg

What is the proposed new VAT threshold for non-resident digital service providers in Taiwan?

When will the new VAT threshold come into effect?

Who is affected by the proposed VAT threshold increase?

What is the deadline to submit comments on the proposed VAT changes?

Do non-resident digital service providers need to register for VAT under the current rules?

How should foreign service providers prepare for the proposed VAT changes?

VAT Compliance and Reporting