Manufacturer Charging Tax on Assembly

Business Entrepreneurship
1

Hi,

Anyone manufacture/assemble anything in Taiwan before?

I have a US-based and registered company paying a local Taiwanese company for assembly services on a product i am making (basically labor only - im supplying raw materials). I will take delivery of the finished goods here in Taiwan (i dont have to, but am choosing to do so for now).

On the invoice i received, they have included a 5% tax. I would like to know if this tax only applies between local Taiwanese companies (I’ve never been invoiced for tax on any manufacturing invoices here). Or is it because i am taking delivery of finished goods here? Just wondering if anyone can clarify the conditions under which this 5% tax will apply.

Thanks

2

5% is VAT. If the transaction must be on the book then the business must charge it. If you want it off the book then they can exclude it and not charge it.

3

Thanks for the quick response. Is this choice of keeping it on the books or not usually up to the customer (me)? Or will they likely take issue with not collecting VAT?

4

it’s usually up to the customer. The thing is if you need to declare a business expense, show the expense or prove it to someone or something, then yea you need to put it on the book.

Lots of businesses here evade taxes.

5

Thank you!