The Ministry of Finance (MOF) is planning to impose a business tax on cross-border electronic commerce operators starting from next year in a bid to close a loophole that had allowed foreign e-commerce providers to dodge taxes in Taiwan.
The MOF said that it will invite representatives of foreign e-commerce operators to a meeting scheduled for Aug. 18 to discuss the tax. In the upcoming meeting, the ministry will also invite accountants, bookkeepers and taxation experts from the academic sector to map out a policy for the new tax scheme, hoping it can be implemented by 2017 at the earliest.
According to a recent survey conducted by research firm Acenture and AliResearch, sales to be posted by business to consumer (B2C) cross-border e-commerce activities could rise to US$1 trillion in 2020 from just US$230 billion recorded in 2014.
The compound annual growth rate of global e-commerce business over these years is expected to hit 27.4 percent as more and more investors jump into the market, including the market in Taiwan, the data showed.
However, these foreign e-commerce operators, who have raked in handsome revenue by selling commodities or services to Taiwanese consumers, have been long criticized for being exempt from paying any tax to Taiwan's authorities.
Since foreign e-commerce operators do not have to set up any physical branch foothold or even a sales office here, they can easily dodge taxes in Taiwan by simply running their business through a digital platform from overseas.
The National Taxation Bureau of Taipei under of the MOF said that currently, only a handful of foreign e-commerce operators have set up a subsidiary in Taiwan, and they tend to claim that they just provide services to their parent companies in an attempt to lower their tax burden in the Taiwan market.
The MOF said that it will push for an initiative to request foreign e-commerce operators to register in Taiwan and hire a tax representative here to deal with their taxation affairs. The ministry said that such a model has been seen in the neighboring countries such as Japan and South Korea.
The ministry said that it is planning to submit a draft amendment to the business act to the Cabinet in September for approval and then send the law revision to the Legislative Yuan soon to achieve its goal of having a new tax scheme in place by next year.