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.
What is Taiwan’s eGUI system?
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.
Practical considerations to achieving compliance
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.
1. Selecting a third party for Taiwan eGUI purposes
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:
- A robust contractual arrangement supporting our core business services
- Audited, and internationally-recognised, security certifications, e.g. ISO 27001
- Documentation that was concise and understandable
- Flexibility with implementation options, e.g. allowing the use of an API or a batch upload process
- Realistic implementation timelines. This was especially important given Taiwan’s January 1, 2020, deadline for compliance with their eGUI requirements.
- An excellent level of English is necessary during web conferencing calls and in written communication.
2. Integrating to use the Taiwan eGUI system and e-invoicing
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:
- eGUI numbers: You should estimate the number of eGUI numbers needed and request them ahead of time. However, if you underestimate the amount required there is a three-week process in receiving a new batch of eGUI numbers. The key is not to underestimate the number of eGUI numbers required.
- Relevant reporting period: eGUI numbers must be requested for every bi-monthly reporting period. Note that the bi-monthly tax settlement to Taiwan needs to match the e-Invoices sent to the MoF.
- Lottery information: Taiwan invoice lottery information must be added to each invoice. The following lottery promotional text must be included on invoices: “Download the “Claiming Rewards App” from the Taiwan Ministry of Finance and check for the winning numbers. Also, register your email address to receive notifications of the winning numbers.”
- Email: Customer’s email address.
- Amounts: Amount paid for the service and products sold.
- B2C sales details: The details of your B2C sales and any credit notes must be sent to the MoF within a 48-hour window. These details need to include the eGUI number used.
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.
How Taxamo can help you in Taiwan
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:
- Manage the process to set-up and configure a Taxamo account for you so that a batch of eGUIs is assigned for the relevant reporting period.
- Arrange registration with the Ministry of Finance (MoF) for the e-invoicing system. You can integrate your current transaction process with the Taxamo API and Taxamo will return the eGUI numbers to you for each sale and credit note.
- Send the transaction to the MoF within the required period via our selected partner. We can provide you with information to update your own invoice that is sent to the customer, or you can choose to use Taxamo's e-invoicing for the invoice that goes to the customer.
- Provide tax calculation and reporting services. So you can download your Taiwan tax settlement report via Taxamo's online reporting portal.
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.
PLEASE REMEMBER THAT THIS INFORMATION HAS BEEN PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT PRESENTED AS SPECIFIC TAX OR LEGAL ADVICE. ALWAYS CONSULT A QUALIFIED TAX OR LEGAL ADVISOR BEFORE TAKING ANY ACTION BASED ON THIS INFORMATION. VERTEX INC. ACCEPTS NO LIABILITY FOR ANY LOSS RESULTING FROM ANY PERSON ACTING OR REFRAINING FROM ACTION AS A RESULT OF THIS INFORMATION.