Business operators giving gifts during the Mid-Autumn Festival are reminded to check whether they should issue uniform invoices, according to the Taipei National Taxation Bureau of the Ministry of Finance.
The Bureau explains that, according to Article 3, Paragraph 3, Subparagraph 1 of the Value-Added and Non-Value-Added Business Tax Act (hereinafter referred to as the Business Tax Act), when a business operator transfers goods produced, imported, or purchased for sale to other business operators for their own use or transfers such goods to others free of charge, it is considered a sale of goods. When a business operator gives gifts to customers or rewards employees using goods originally purchased for sale and has already reported and deducted the input tax amount when purchasing these goods, it should be considered as selling goods when used for social entertainment or rewarding employees, and a uniform invoice should be issued to report and pay business tax based on the market price as required by law. The input tax amount stated on the self-issued uniform invoice for this purpose is considered to be related to social entertainment or employee rewards and cannot be used for offsetting the output tax amount according to Article 19, Paragraph 1 of the Business Tax Act. However, if a business operator has not reported and deducted the input tax amount when purchasing the gifts and has already decided to use them for social entertainment or rewarding employees, they can exempt from issuing uniform invoices when giving these gifts.
The Bureau provides an example: Company A purchases 100 items of goods for sale at a cost of NT$100,000 and has reported and deducted an input tax amount of NT$5,000 when purchasing. Later, Company A uses these goods as Mid-Autumn Festival gifts for employees. Since the input tax amount was reported and deducted when purchased, Company A should issue uniform invoices based on the market price and the input tax amount stated on the self-issued uniform invoice cannot be used for offsetting the output tax amount. Company A also purchases 10 gift boxes for NT$210,000 as gifts for customers. Since it was recorded as entertainment expenses of NT$210,000 when accounted for, and the related input tax amount of NT$10,000 was not reported and deducted, Company A can exempt from issuing a uniform invoice when giving these gifts.
The Bureau urges business operators to check whether they should issue uniform invoices when giving gifts and be mindful of avoiding reporting and deducting input tax amounts that cannot be offset. Failure to comply with the regulations may result in penalties. If there are tax-related doubts, please contact your local National Taxation Bureau branch or tax collection office to inquire about the relevant regulations or call the toll-free service number 0800-000-321 for assistance.
Source: mof.gov.tw
