On January 1, 2020, foreign suppliers of B2C digital services to Taiwan-based customers must comply with Taiwan’s eGUI - electronic Government Uniform Invoice - and e-invoicing systems.
However, doing so is quite difficult as we can testify having actually completed this process of compliance. Here we explain the Taiwan eGUI system, its impact on e-invoicing, and some of the practical compliance issues faced by a digital business that is not based in Taiwan.
Taiwan introduced an invoice lottery system back in the early 1950s to encourage customers to request an invoice which in turn would increase compliance with its tax laws. The incentive to request an invoice was that the customer would then be entered into a lottery with their numbers being those used on invoices that they requested.
Each year there are six lottery draws and cash prizes are announced based on the eight-digit invoice numbers that are drawn out. The system has proven to be an incredible success boosting Taiwan’s tax intake and increasing compliance.
In 2006 the Taiwanese authorities introduced e-invoicing in an attempt to reduce the number of paper invoices that were being printed each year. When Taiwan’s rules on the supply of digital services supplied by non-resident business changed in 2017 foreign suppliers were initially exempted from complying with the e-invoicing requirements. However, this exemption was removed in January 2019 with a deadline for compliance set for January 2020. There are no plans by the Ministry of Finance (MoF) to further extend this compliance deadline date with eGUI regulations for foreign suppliers.
So, how can foreign suppliers comply with this Taiwan eGUI requirement? Well, it’s quite difficult.
Firstly, compliance with Taiwan’s eGUI system is a labour-intensive process. It requires many resource hours dedicated to correspondence with the authorities in Taiwan and with potential third parties that are promoted by the MoF via their website.
Significant barriers to progress at this initial stage, as we discovered, are language and timezone differences (especially for businesses based in Europe and the Americas).
Unfortunately, it is not possible for non-resident businesses to integrate directly with Taiwan’s MoF system. Only Taiwan-based businesses can do so. This means affected non-resident businesses must source a Taiwan-based third party to integrate with the MoF system. This integration is needed to enable these businesses to request and receive eGUI numbers and to send details of their sales and refunds to the MoF.
The Taiwan MoF will provide a list of 30 potential third parties offering their value-added service of integrating with the eGUI system.
All of the third parties on the list are Taiwan-based with no recognizable international brands. Very few of the third parties have a website, of those that do - only a handful are available in the English language.
Deciding on the third-party to engage with and to proceed to contract stage with requires a lengthy correspondence period for obvious due diligence reasons. For example, Taxamo sent emails to all of the companies on the MoF list. The emails included a brief questionnaire relating to potential integration options, costs, security certifications, and service requirements/limitations.
The responses received to these questions allowed Taxamo to narrow our search down to a handful of third parties.
The following factors were important for Taxamo when selecting our preferred third party:
Once the third party is selected then there is an integration period. The foreign supplier needs to be registered to use the eGUI system. Within 48 hours of the B2C transaction, e-invoices need to be logged with the MoF with the appropriate eGUI number.
The Taiwan eGUI system requires adherence to the following requirements when supplying e-invoices to Taiwan-based consumers:
It should be noted that the VAT payment that is sent to the Taiwan authorities on a bi-monthly basis needs to match the information provided to them via the eGUI system. In addition, the e-invoicing is not applicable to B2B sales.
Taxamo’s technology solution integrates an invoicing module. Taxamo provides a solution for Taiwan e-invoicing through our API.
For affected foreign suppliers of B2C digital services Taxamo can do the following:
As we have already navigated our own way through these eGUI and e-invoicing requirements in Taiwan we can be of great help to you.
Taxamo content is created for guidance only, please consult your local tax advisor.
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