“VAT on cross-border electronic services” How foreign suppliers convert their sales amount in foreign currencies into the New Taiwan Dollar when filing VAT

  To solve VAT file inquiries from foreign suppliers, the Ministry of Finance (MOF) has recently issued an Explanation Decree about the exchange rate conversion where foreign suppliers selling electronic services in foreign currencies which they adopt to calculate their sales amount are not among the currencies listed by the Bank of Taiwan, to faciliate these suppliers in filing VAT returns.   The MOF explained that in order to respond to the international trend and to control our tax sources, we amended our Value-Added and Non-Value-Added Business Tax (hereinafter referred to as VAT) Act and stipulated that foreign suppliers selling cross-border electronic services to domestic individual purchasers shall register and pay VAT from May 1, 2017. Furthermore, in order to understand foreign suppliers’ views on the implementation of this new VAT system on cross-border electronic services, the MOF held two meetings in August to listen to their opinions. At the meeting, some participants raised the issue that the types of foreign currencies which the MOF built into “VAT on cross-border electronic services” on the eTax Portal in accordance with the currencies listed by the Bank of Taiwan are too restricted and do not include the currencies they use to calculate their sales amount. Therefore, these suppliers suggested the MOF could build a consistent principle for them to follow.   The MOF stated that there is no uniform worldwide foreign exchange market to provide a consistent exchange rate conversion, in order to provide a simplified basis for foreign suppliers to follow and file their VAT returns smoothly, an Explanation Decree was issued on November 10, 2017, stipulating that foreign suppliers selling electronic services in foreign currencies which they adopt to calculate their sales amount are not among currencies listed by the Bank of Taiwan, shall convert the sales amount at the buying exchange rate listed by their Correspondent Bank in accordance with the specific stipulated date in Article 32-2 of the Enforcement Rules of the VAT Act into any currency listed by the Bank of Taiwan, and then convert that amount into the New Taiwan Dollar in accordance with the provision of the aforementioned Enforcement Rules. Contact:Section Chief Ms. Yeh Telephone:+866-2-2322-8133