Penalty for Reporting Deductible Tax Amount Using Another Person’s Input Tax Certificate

• Businesses can use other people’s input tax certificates to declare and offset their tax amounts, but they will still be penalized if it is not a “registration error”.
• If a business taxpayer who uses the internet to declare business tax makes a “registration error” that results in an overstatement of input tax by less than 7% of the total input tax for that period and an understatement of output tax by less than 7% of the total output tax for that period, they will be exempt from penalties.
• The Kaohsiung National Tax Bureau recently discovered that Company A mistakenly reported and offset the input tax amount of Company B when using the internet to declare business tax, resulting in an overstatement of input tax by NT$3,000. In addition to recovering the tax payment, Company A was also penalized according to the provisions of Article 51, Paragraph 1, Subparagraph 5 of the Value-Added and Non-Value-Added Business Tax Act.
• Company A argued that it was a “registration error” and asked why the exemption from penalties under Article 15, Paragraph 2, Subparagraph 2 of the Penalty Reduction Standards cannot be applied since the overreported input tax amount is less than 7% of the total input tax for that period.
• The tax bureau clarified that the term “registration error” in the Penalty Reduction Standards refers to errors made by taxpayers when inputting the legally reportable input and output data during online tax filing. It includes situations such as data input errors, omissions, and duplications. Company A’s mistake of using another business’s input certificate to declare and offset tax does not fall under the definition of “registration error” in the aforementioned letter, but rather constitutes a violation of “overstating input tax”, thus the exemption from penalties does not apply.
• The tax bureau reminds businesses to carefully check and verify the accuracy of each input and output certificate when declaring business tax to avoid penalties. For tax-related inquiries, the public can call the toll-free number 0800-000-321 or visit the tax bureau’s website (https://www.ntbk.gov.tw) to use the “National Tax Smart Customer Service” online query tool.

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.