- The Ministry of Finance clarified that the statutory late payment interest collected by businesses for the delayed payment of goods or services is not considered as sales revenue and is not subject to business tax.
- According to the Ministry of Finance, the late payment interest collected by businesses is not considered as part of the sales revenue defined in the Value-Added and Non-Value-Added Business Tax Law.
- However, if a business is found to be engaging in tax avoidance, the tax authorities should still assess the case based on the legal form that corresponds to the economic substance.
- The interest income collected by businesses is subject to taxation according to the provisions of the Value-Added and Non-Value-Added Business Tax Law.
- The Ministry of Finance explained that sales revenue refers to the total consideration received by businesses for the sale of goods or services, including any additional fees charged by businesses.
- Late payment interest is considered as compensation for damages caused by the delay in payment, and it is not considered as part of the sales revenue.
- The Ministry of Finance will revoke and reissue relevant interpretations to address the issue of including late payment interest in the sales revenue for the purpose of business tax.
- In accordance with the new interpretation, the Ministry of Finance will also revoke previous interpretations to avoid disputes.
- The Ministry of Finance will require withholding agents to comply with the income tax regulations for the portion of late payment interest collected due to delayed payment by buyers.
- The Ministry of Finance will provide further details and instructions regarding the implementation of the new interpretation.
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.
