- When a business in Taiwan dissolves or ceases operations, the remaining inventory should be distributed to shareholders or contributors and treated as the sale of goods.
- The Taipei National Taxation Bureau of the Ministry of Finance states that if a business distributes its remaining inventory to shareholders or contributors upon dissolution or cessation of operations, it should issue unified invoices based on the market price and declare and pay business tax.
- The bureau explains that when a business distributes its remaining inventory to shareholders or contributors upon dissolution or cessation of operations, it is considered equivalent to selling goods and distributing cash to shareholders or contributors. Therefore, it should be treated as the sale of goods and the sales amount should be determined based on the market price of the goods during the same period, according to the regulations of the Value-Added and Non-Value-Added Business Tax Act.
- The bureau provides an example of a wholesale stationery company that dissolved and distributed its remaining inventory to 10 shareholders. The market price of the inventory was NT$1.05 million (including tax), and the company should report and pay business tax based on this amount.
- The bureau urges businesses to promptly report and pay any omitted business tax if they unintentionally fail to issue unified invoices for transactions considered as the sale of goods. They can do so before being investigated by the taxation authorities or designated investigators from the Ministry of Finance, and they will not be penalized but may be subject to interest charges.
Source: mof.gov.tw
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
