Back Filing and Voluntary Disclosure for Taiwan VAT

If your business has been selling digital services to Taiwan consumers and has not yet registered or remitted VAT, you may have outstanding tax obligations. Here is what you should know.

Voluntary Supplementary Declaration (Article 48-1 of the Tax Collection Act)

Taiwan has a permanent, codified voluntary disclosure mechanism. If you proactively file a supplementary VAT return and pay the outstanding tax before the tax authority opens an investigation against you, you may be:

• Remitted from penalties under Articles 41–45 of the Tax Collection Act

• Remitted from criminal liability (if a criminal act is involved)

To qualify, the disclosure must not be prompted by an informant or an active investigation by the Ministry of Finance.

What you still owe under voluntary disclosure:

• The full principal VAT amount

• Daily interest accrued at the one-year postal savings fixed deposit rate from the original payment deadline

• Late-filing surcharges are also waived under qualifying voluntary disclosure

Statute of limitations:

• 5 years from the original filing deadline (for timely filers)

• 7 years for non-filers or cases involving fraud or tax evasion

What is reverse charge and why does it matter for your records?

Reverse charge is a VAT mechanism used in cross-border B2B transactions. Under this mechanism:

• The non-resident seller does not charge VAT on the invoice.

• The Taiwanese business buyer self-assesses the 5% VAT and reports it in their own bi-monthly return.

If you are a non-resident seller, B2B reverse charge sales do not count toward your TWD 600,000 registration threshold and do not require you to register in Taiwan. Your invoice should note that reverse charge applies.

If you are a Taiwanese business buying foreign SaaS services, you are required to self-assess 5% VAT on those purchases and report it as imported services in your bi-monthly return. You may claim input VAT credit for this if the purchase is used for taxable business activities.

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