VAT for foreign service providers with Taiwan branch

VAT Issues

The foreign company with fixed business establishments in Taiwan (such as a Taiwan branch)and the foreign company providing services to Taiwan clients should file VAT through its Taiwan branch and pay 5% VAT(business tax) according to the Taiwan Tax Code.

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If the foreign company has a Taiwan branch, the foreign company should file VAT through its fixed business establishment registered (Taiwan branch) and pays VAT. The deadline for VAT filing is within 10 days after the service payment is settled.

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For example:

Foreign Company A has a Taiwan branch, and it provides technical services to Taiwan Company B, agreeing to provide mechanical design and consultancy services to Company B. The branch should file VAT and pay VAT within 10 days after Company B settles the payment.

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Company income tax issues

On the other hand, Company B (Taiwan client) is not required to withhold tax for Foreign Company A, but the Taiwan branch should include the service fee in the Branch's income tax return and pay the tax for the foreign head company.  

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Ask our assistance

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Discuss with us before signing the service contract with your Taiwan customers.  We have extensive experience helping our clients to evaluate whether the withholding tax deduction application is applicable. Contact us for more information.