New MOF regulations aim to clamp down on international tax evasion
By John Liu ,The China Post
February 19, 2014, 12:13 am TWN
TAIPEI, Taiwan -- In an effort to curb tax evasion conducted via online shopping, the Ministry of Finance (MOF) has recently passed an amendment to customs regulations in an effort to more closely monitor cross-border shipping and to maintain taxation justice.
Internet shopping across the strait as well as around the globe has become increasingly popular. Take e-commerce website taobao.com, a major internet shopping portal based in mainland China that recently broke into the Taiwan market. It is estimated that up to NT$300 billion worth of transaction value will be created on taobao in Taiwan in 2014.
However, online transactions have also become a haven for tax evasion. The MOF initiated a special work team last year, in an effort to sniff out tax evasion practices through online shopping. The nation's five taxation bureaus and the Customs Administration have been charged with the responsibility.
Under the current regulation, parcels that are worth of NT$3,000 or less are exempt from taxation. However, online shoppers have exploited this tax loophole through various methods. For instance, some buyers have requested to have their goods worth more than NT$3,000 to be shipped in multiple packages to avoid tax. Others simply write down parcel content value to NT$3,000 in custom filing, despite their higher values. These practices have resulted in loss of tax collection.
In order to curb these practices, the MOF recently adopted an amendment to the regulation that governs parcel passage through customs. Under the new rule, the National Taxation Bureau will levy tariffs, commodity tax and business tax on frequent buyers: for shipments that go to the same address or the same receiver more than twice every month, or more than six times every half a year. The NT$3,000 exemption rule will no longer apply.
In order to prevent shoppers from "disassembling" their goods to avoid taxes, the taxation bureau also ruled that if shipments are mailed from the same address to the same receiving address or receiver on the same day, twice a month, the reported value of the shipments must be added up together to calculate the goods' value. By doing so, goods with a value more than NT$3,000 that are shipped separately will still be taxed.
According to a local news report, the practice of separating goods shipments and writing down goods' values to avoid tax has become more and more prevalent. The Taipei Taxation Bureau requested a re-submission of NT$150.58 millions worth of tax last year. Despite the fact that it represented a small portion of the Treasury's total tax collection, the MOF decided to close this tax loophole, in an effort to maintain taxation justice.