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Taiwan: VAT on Cross-Border Sale of Digital Services

(Nov. 9, 2016) On September 22, 2016, Taiwan’s Executive Yuan (Cabinet) approved draft legislation to amend the Value-Added Tax Act with regard to cross-border sales of digital services. (You Kang Jin, Taiwan: Draft Bill Passed to Amend VAT Act on Cross-Border Sale of Digital Services, TAX NEWS SERVICE (Sept. 26, 2016), International Bureau of Fiscal Documentation online subscription database; Value-Added and Non-Value-Added Business Tax Act (June 13, 1931, as last amended Dec. 30, 2015), Laws & Regulations Database of the Republic of China (toggle for Chinese text).)

Drafted by the Ministry of Finance, the amendments were made with reference to proposals of the Organisation for Economic Co-operation and Development (OECD) and to the tax laws of the European Union, Japan, and Korea. (OECD Delivers International Standard for Collection of VAT on Cross-Border Sales, OECD website (Nov. 6, 2015); Telecommunications, Broadcasting & Electronic Services: Rules Applicable Since 2015, European Commission Taxation and Customs Union website (last updated Nov. 8, 2016); Takeo Mizutani & Chizuko Tomita, New Japanese Consumption Tax Treatment on Cross-Border Digital Services, MARTINDALE.COM (Mar. 9, 2016); Robert Gallagher, Korea Amends Cross-Border Supply of Electronic Services VAT Scheme, SOVOS (Feb. 9, 2016).)

The Executive Yuan’s proposed legislation includes provisions that: