Definition of 'Commercial Vehicle' for Tax Purposes?

I’ve spent a few hours searching through the tax laws but can’t find any firm definition of a ‘commercial vehicle’ for tax purposes. At one point does your car/truck become a ‘commercial vehicle’ and is there any middle ground for, say, tradesemen who use their car to carry tools to work but also drive their kids to school?

The gist of what I’m asking is whether, given that 95% of my driving is visiting suppliers/clients for work is there any way I can claim commercial usage on my truck?

Hi llary,

There isn’t a special designation of “Commercial Vehicle” in Taiwan. However, there is one way you can gain advantageous business deductions.

There are two ways to register your vehicle: personal or to a company. If you register your vehicle under the company, then expenses such as gas, gas tax and yearly registration are all deductible business expenses for the business.

If you register your vehicle personally, then you may be reimbursed your gas only. If the company also reimburses the gas tax and yearly registration expenses, these will be considered as a benefit to you and taxable as such on your personal income tax.

I’m not sure if you can register a car as a company vehicle. I vaguely remember looking at this before and getting the answer that if there were a tax break to be had, people would be setting up companies left and right to take advantage of it. As I know, every vehicle registered to a company has to have the vehicle weights painted on the outside and the registration number painted on the back. Ever seen that on a sedan or station wagon?
I think you can register your armored personnel carrier as a commercial vehicle however, as long as you paint the needed info on the outside. :wink:

[quote=“redwagon”]I’m not sure if you can register a car as a company vehicle. I vaguely remember looking at this before and getting the answer that if there were a tax break to be had, people would be setting up companies left and right to take advantage of it. quote]

Except that the set up costs and yearly tax filing costs to set up a company would render this inefficient. You aren’t going to save a lot of money by registering with your company if you are doing it just for gas tax and annual registration deductions. However, if you already have a company, then it makes sense.

[quote=“baaadrabbit”]
Except that the set up costs and yearly tax filing costs to set up a company would render this inefficient. You aren’t going to save a lot of money by registering with your company if you are doing it just for gas tax and annual registration deductions. However, if you already have a company, then it makes sense.[/quote]
Given that a ‘dai shu’ can set up a company in a couple of days for a few thousand, and given that a company can take a loss for three years and pay zero tax, it seems it is a loophole that people would exploit if they could. Imagine you are a three-car family. Imagine if you could have a ‘company car’ based on you owning a licenced noodle stall or momma-poppa-store. No one would pay tax on their private car.

I believe in the UK the tax for a company car is a lot more than for a private car, and is considered a taxable perk, there’s more to pay but it goes through the company. Not Taiwan I know…

[quote=“llary”]I’ve spent a few hours searching through the tax laws but can’t find any firm definition of a ‘commercial vehicle’ for tax purposes. At one point does your car/truck become a ‘commercial vehicle’ and is there any middle ground for, say, tradesemen who use their car to carry tools to work but also drive their kids to school?

The gist of what I’m asking is whether, given that 95% of my driving is visiting suppliers/clients for work is there any way I can claim commercial usage on my truck?[/quote]

You poor guy…I know why this is being done, and trust me, every year after the sting of large displacement tax time (That 28k hurts doesn’t it?) I used to search for every loophole I could find. No go on this one.

If I makes you feel any better…I’m stinging too. :s

[quote=“MJB”][quote=“llary”]I’ve spent a few hours searching through the tax laws but can’t find any firm definition of a ‘commercial vehicle’ for tax purposes. At one point does your car/truck become a ‘commercial vehicle’ and is there any middle ground for, say, tradesemen who use their car to carry tools to work but also drive their kids to school?

The gist of what I’m asking is whether, given that 95% of my driving is visiting suppliers/clients for work is there any way I can claim commercial usage on my truck?[/quote]

You poor guy…I know why this is being done, and trust me, every year after the sting of large displacement tax time (That 28k hurts doesn’t it?) I used to search for every loophole I could find. No go on this one.

If I makes you feel any better…I’m stinging too. :s[/quote]

Sadly, it makes me feel worse… as I was forking over my 29 crisp bills I realised why most SUV drivers are complete arseholes. For that kind of money I expect open license to be a complete arseholes too.

Oh well - it would be twice as much for a car half the size back in England (think happy thoughts etc.) And my ‘insurance’ was all of 3 grand. Life ain’t so bad.

[quote=“redwagon”][quote=“baaadrabbit”]
Except that the set up costs and yearly tax filing costs to set up a company would render this inefficient. You aren’t going to save a lot of money by registering with your company if you are doing it just for gas tax and annual registration deductions. However, if you already have a company, then it makes sense.[/quote]
Given that a ‘dai shu’ can set up a company in a couple of days for a few thousand, and given that a company can take a loss for three years and pay zero tax, it seems it is a loophole that people would exploit if they could. Imagine you are a three-car family. Imagine if you could have a ‘company car’ based on you owning a licenced noodle stall or momma-poppa-store. No one would pay tax on their private car.[/quote]

Unless you are the accountant yourself (dai shu), then you are still going to have to pay the cost for the accountant to keep up with the monthly and annual tax filing costs. That’s going to run NT$15,000 - 30,000 a year alone.

Its not a loophole - its a real business tax deduction. Its just not enough to make it worthwhile for every Joe to trouble with it. Incidentally, “paying a few thousand to set up a company in a couple of days” (without the actually required working capital - the common practice is to borrow it) is a violation of the Company Law. People do it at their own risk.

If you already have a business, it make sense to register it under your company.

Oh, one more point. The requirement to paint the vehicle numbers on your vehicle applies to “trucks and buses” but not cars (with the exception of taxi’s apparently). I don’t think your SUV will be deemed a “truck”.