Declaration and Deduction of Input Tax Amount for Purchase Returns or Allowances

• Businesses should report and deduct input tax amounts for purchases, returns, or allowances in the same period.
• The Taipei National Tax Bureau explains that the balance after deducting input tax amounts from sales tax amounts is the amount of tax payable or refundable for the period.
• If a business purchases goods or services for use in its own or subsidiary business and later returns or allows for a reduction in the sales tax amount, the business should deduct it from the input tax amount for the period to avoid overestimating or underestimating the sales tax amount.
• An example is given where a company purchases 10 laptops and later returns 5 of them. The company should deduct the corresponding input tax amount for the returned laptops in the reporting period.
• If a business fails to report and deduct the input tax amount for returns or allowances, they can voluntarily report and pay the missed tax amount with interest before being investigated or reported by the tax authorities.

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.

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