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Taiwan Taiwan Taxation Comparison on Method of Filling Tax Returns for Profit Seeking Entities
KNOWLEDGE|
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Tax Filing Expanding to the Case Qualified for the Standards Issued by the Ministry of Finance (MOF) |
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The Tax Filing Expending to the Case Qualified for the Standards Issued by the Ministry of Finance (MOF) is suitable for any Profit Seeking Enterprise whose annual total incomes are not greater than NT$ 30 million. MOF had introduced the standards for the purpose of reducing the imbalances of tax receiving from Small and Medium sized Enterprise. Unlike ordinary tax filing, a percentage of the total incomes generated for the year will be regarded as the taxable profit for the year of assessment, in the case of accounted net profit margin is lower than the introduced qualified net profit margin, the entity will be required to adjusted to the qualified net profit margin, vice versa, if the accounted net profit margin is greater, the taxable amount will be based on the accounted net profits. Pros: (1) Due to risk of being tax audited by the Administrative of Taxation is low, only simple books of account will be required for the year. (2) Cost saving for the company as the company will only require having a Certified Bookkeeper and a tax associate to get the filing done. Cons: (1) There will be no loss credit is allowed in the calculation of the tax, as there is a qualified net profit margin as floor. (2) When the company was subjected to be tax audited by the tax authority, there is a risk of being fined due to books of accounts are not properly kept. (3) As the company’s financial position was not tied with the accounts summited to the tax authority, it would cause cultural conflict as at the point of attracting new investors. Remarks: (1) For enterprises who have selected above mentioned tax filing method shall make sure all of the documents that had been provided to your associated bookkeeper is well booked instead of a rough calculation to meet the qualified net profit margin. (2) The enterprise shall also be alert that all documents provided to the associates are return in-tac with the books of account after the tax filing in case the tax authority would initiate a tax audit. |
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Ordinary Tax Filing |
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The Company who have selected Ordinary Tax Filing shall fill up their tax form to be submitted based on the profits that the Company generated in the year of assessment. This method would require the Company to prepare a whole set of accounts in a proper manner. Pros: (1) The enterprise will not be subjected to tax if losses had incurred for the year. (2) No certified public accountants shall be required to be in the tax filing team. Cons: (1) Enterprise books of accounts shall be prepared in a proper manner in case the tax authority would like to perform tax audit. (2) No loss credit will be allowed to be carried forward to offset following year’s tax liability. |
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Tax Filing with Audited Report |
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A tax filing with audited report shall be done with appointment a certified public accountant to perform an audit on the tax report by every May of the year of assessment. The Certified Public Accounted will be auditing the company’s books of accounts and tax report thereon signed off and submit to the MOF. To perform a tax report signing off, the company may acknowledge that this shall be prepared: (1) A proper sets of accounts with compliance of ROC GAAP shall be prepared. (2) All income and expenses invoices are properly documented. (3) Accounting and tax report are prepared annually. (4) Internal controls policies are well established. Pros: (1) Probable tax saving advantages due to professional CPA onboard. (2) Higher tolerance by the MOF of having high entertainment expenses incurred in the books (3) Tax loss credit are available to offset future 10 years profits. (4) With CPA onboard could avoid miscommunication and misinterpretation on the additional information required when the tax audit is performed by the MOF which might cost tax penalty. Cons: The company may cost annual subscription fee to keep the CPA onboard. |
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For a smaller scaled company and maintained annual revenue as at NT$ 30 million Kaizen would likely to advise the method Tax Filing Expanding to the Case Qualified for the Standards Issued by the Ministry of Finance (MOF). On the other hand, for enterprise that have retained annual turnover above NT$ 100 million, Tax Filing with Audited Report is enforced by-Law. Price war in between accountancy service provided had been dramatically happening and had recently arrived below par when the Certified Bookkeeper is available in the market. Kaizen warmly remind to all profits seeking enterprise owners, professional service worth a cost. |
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Disclaimer All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage. |
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