Restrictions on Deducting Input Tax for Shareholder Gifts: Tax Bureau Clarification

• The Taipei National Taxation Bureau of the Ministry of Finance stated that when a company gives shareholders commemorative gifts during a shareholders’ meeting, the input tax amount cannot be deducted from the output tax amount.
• According to the Value-Added and Non-Value-Added Business Tax Law, gifts given to shareholders during a shareholders’ meeting that are unrelated to business promotion cannot be used to offset the output tax amount.
• For example, if a company purchases 10,000 travel mugs as commemorative gifts for shareholders, the input tax amount paid for these gifts cannot be used to offset the output tax amount.
• The bureau reminds businesses that if they incorrectly report the input tax amount paid for shareholder gifts as an offset to the output tax amount, they must rectify the mistake before being investigated by tax authorities and may be subject to penalties and interest.

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.

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