Statutory Late Payment Interest Exempt from Sales Tax, Taiwan Tax Bureau Clarifies

• Legal late payment interest collected by businesses from sales of goods or services is not considered part of the sales amount and is not subject to business tax
• The Central Regional National Tax Bureau states that according to the Ministry of Finance order dated December 6, businesses collecting late payment interest under civil law due to delayed payments by buyers do not need to charge business tax on this interest
• Businesses that have mistakenly issued invoices and paid business tax for such interest can apply for a correction by submitting an application detailing the issue along with the relevant business tax return and supporting documents
• Inquiries have been made about whether late payment interest needs to be invoiced and business tax paid when a company sells machinery and equipment and the buyer delays payment; it has been clarified that such interest does not require invoicing or payment of business tax

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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