- Liquidated damages related to the sale of goods or services are subject to business tax and require an invoice.
- Late payment interest, as defined by civil law, is not subject to business tax and does not require an invoice.
- If “interest” is used to disguise sales income, it will still be taxed as part of the sales amount.
- Businesses that fail to issue invoices for taxable liquidated damages or compensation should proactively report and pay the tax to avoid penalties.
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.
Latest Posts in "Taiwan"
- Taiwan Cracks Down on E-Commerce Sellers Evading Invoices and Business Tax Obligations
- Taiwan E-Invoicing (eGUI): Key Requirements, Compliance Steps, and Penalties for Businesses
- No Business Tax on Inherited Sole Proprietorship Assets; Tax Applies Only to Business Transfers
- Taiwan Clarifies Input VAT Deductions for Mixed-Business Operators on Fixed Assets and Overpayments
- Taiwan Clarifies Tax Rules: Contract Penalties Taxable, Late Payment Interest Exempt from Business Tax
