I am on an APRC with an open work permit. I perform engineering consulting services both in Taiwan and abroad as an independent contractor. Thanks to some recent changes in the law, sole proprietors such as myself can file their business profit and loss together with their personal income tax, and do not need to file any quarterly/monthly reporting/withholding. See more in Section A(3) of this article:
When I provide paid services to foreign entities, it is pretty clear that I do not need to issue any Government Uniform Invoice (GUI, aka āfapiaoā / ē¼ē„Ø). However, for local Taiwanese clients, I am not certain, and I cannot find any English-language information online. Does anyone know the answer to this?
For reference, my total business income is above the $200,000 NT/month āsmall-scale enterpriseā threshold. However, I do not have any registered business entity such as an LLC. I work under my own name.
Youāre gonna want to no matter what. Clients love the fapiao and the 5% tax discount. It also lends legitimacy and helps you look good to both clients and the government.
Just out of interest because Iāll be in a similar situation soon: Did you need to setup anything? Like āregisteringā for a sole proprietorship? Or just started working and issuing invoices with your name and home address on them?
I wish I go over the threshold. I make so little, like probably maybe 10,000 a month if I am lucky.
But fapiao is a government/legal document. If you issue a statement with amount paid/etc. itās not a fapiao. Itās simply a receipt. That also means they canāt declare their number on it so they can get a tax write off/VAT refund.
If you make well above the small business enterprise then you are going to want to register as a LLC in any case. This is to protect you from possible liabilities. The downside is youāll spend money on admin stuff rather than spending it on the business itself.
You really should be talking to an accountant if this is your situation.
Even if I register I have the dishonor of having the big yellow stickerā¦ Means Iām a poor schmuck who donāt make enough for the government to even want to tax me.
I did not set up anything. I have read a lot of conflicting information on this though, so it may be the case that I should be following the steps for a partnership given here:
I am using a US address (my country of citizenship) for my invoices. My apartment here is rented and as is typical, the landlords do not report rental income and explicitly forbid me from using the address for business purposes. That actually makes this whole situation a bit more complicated ā am I a US sole proprietorship doing business in Taiwan, or am I a Taiwanese sole proprietorship? In the US, no registration is needed for sole proprietorships, so I am clear there. But, does a US sole proprietorship need to register in Taiwan before providing services domestically, where the proprietor already has an open work permit?
As Taiwan_Luthiers said, I should probably be talking to an accountant at this pointā¦
Thatās a huge problem with like 80% of all landlords.
None of them report their rental income so they can evade taxes, and the government isnāt doing enough. I suspect if they start enforcing it itās going to cause an uproar, as landlords will raise rent, tenants will complain that their rents are raised, then workers will demand a wage hike, companies complain because their cost goes up, etc. etcā¦
This is probably why the government seems to not care. I think the rule is, if the rent is under 20,000 they donāt need to report it anyways. But maybe the rule is different if the landlord owns multiple properties and rents them out (and the govt is well aware of the fact that landlords could sign multiple contracts to keep it all under 20,000 if the property is more than that).
So I think just carry on doing what you do, report your income as required. If they require to do fapiao they will let you knowā¦ Landlords donāt like it but if push comes to shove they will sometimes help out and let you register and all that. Most common is neighbors having an axe to grind with the landlord and so they report you to the tax authoritiesā¦
If your client requires a fapiao just give them a receipt. Not a fapiao but will work for the purpose of declaring business expenses.
The whole point of LLC and corporations is to shield owners from liabilities.
They are a legal entity and any debts or obligations are directed to them, not to the people running or operating them.
Itās so a company can make bank loans in the name of a company, and the bank would use company asset as collateral for the loan. So if the company defaults, the bank takes the company as collateral rather than going after people who runs them.
But itās also complicated because now the company would have their money, and the people runs them becomes employees to that company. Meaning you donāt go spend company money for your own stuff unless itās related to the business. Doing that is embezzlement.
It also allows business owners to take risks and take on loans rather than stagnate.
Seems like in Taiwan, everything is ārelatedā to the business.
In Taiwan people/companies even buy and sell receipts to each other or trade. Or they tell their friends and family, use my company number for everything you do and give me your receipts.
I may have misread something. I wasnāt thinking about bank loans only. I thought if the company had bought things, like goods or a service without upfront payment, or owed salary to the employee, the owner was responsible for the debt. I suppose Iām wrong.
Reviving this post for a question that I have wanted to ask for the longest. I only seem to find confusing and contradictory information around, so as always I come to Forumosa for clarity
Gold card holder here, so open ARC. I own a company based in Europe that I use to issue invoices for consulting services. Since I came back to Taiwan at the end of last year, I have been using these two routes depending on the person I was doing business with.
Issue an invoice through my European company, which as @Taiwan_Luthiers wrote is just a receipt here, get paid in cash and wire it to my business account in Europe. This additional step is because local clients would äøå° me if I ask them for a bank transfer to Europe
Use my Taiwanās friend company (a relative of a friend of a friend, the guanxi thing ) to issue a fapiao and make the local client happy, then invoice this āfriendā with my āreceiptā and back to number 1. Of course, I lose money in the process to give him a cut for the courtesy.
I donāt mind number 1, but since most clients want a fapiao at any cost, I am considering finding a long-term alternative to number 2. I would rather avoid the hassle of opening a local company considering that mine is a one-person consulting business with no need for an office (laptop and Wi-Fi, that is) nor for staff.
Am I wrong to say that a Rep Office of my European company wouldnāt help because I couldnāt issue a fapiao anyway? Any other possible routes?
Not asking for tax advice on my own personal income. That is a different story that comes after invoicing and payment to my company, which is my main concern now. Thanks!
If you are a taiwan citizen this would be easy. Any customers I had who needed to report the purchase for tax has always been happy with just an invoice or receipt. As all they need to do is declare expenses for tax exemption, so any proof of money changing hands is sufficient.
However since you are here on gold card, there are requirement to prove you have certain income threshold, so for you I would get a business license and give out fapiao, so your income is on paper.
Does ābusiness licenceā mean opening a local company, or is it some sort of application to freelance in a certain industry? Apologies in advance if the question sounds stupid.
Not correct, I think. This isnāt applicable here - the holderās income is only relevant when applying for the gold card, and company income is distinct from that anyway.
(Might still be a good idea to open a company though, Iām lethargically considering the same thing.)
Thing is, my income is a drop in the bucket compared to most companies, so I never issue fapiao. I think it becomes an issue if your business has a monthly revenue over 100,000 or 200,000. I donāt even get a quarter of that.
Thing is to qualify for a gold card your income will be over that, so itās not a bad idea to open a company.
Exactly. Thatās why I added the final note to my question that personal income is not on discussion. But I agree with @Taiwan_Luthiers that, whatever the criteria to renew/reapply for the Gold Card will be in 3 yearsā time, a local company with healthy books would not hurt for sure
Pretty much me too I look forward to the bureaucratic nightmare of opening a local company as much as eating Vegemite for breakfast I would rather keep routing all payments to my European company, receiving a salary from it and paying income tax here based on that salary. Hassle-free.
) to issue a fapiao and make the local client happy, then invoice this āfriendā with my āreceiptā and back to number 1. Of course, I lose money in the process to give him a cut for the courtesy.
I look forward to the bureaucratic nightmare of opening a local company as much as eating Vegemite for breakfast