Dividend Income Received by Business Entities Should Be Aggregated and Included in the Year’s Last Filing of Tax-Exempt Sales to Adjust Business Taxes
According to Paragraph 2, Article 2 of the "Regulations for the Computation of Business Tax for Dual-Status Business Entities" （hereinafter referred to as "Regulations for Dual-Status Businesses"）, the term "dual-status business entity" means that a business entity supplies both taxable or exempt goods or services, or computes its business tax based on both the general tax amount and special tax amount. Paragraph 1, Article 7 of the same regulations stipulates that at the time of filing the last business tax return for the year, dual-status business entities shall adjust the tax amount based on the non-deductible ratio for the current year, and file and pay the tax due together with the year’s last filing of business tax return. If the books of accounts are complete and the actual use of the purchased goods, services, or imported goods can be clearly distinguished, the direct deduction method can be used to calculate the amount of input tax that can be deducted from the output tax and the tax payable for the purchased foreign service based on the actual use of the goods or service.
The National Taxation Bureau of Kaohsiung, Ministry of Finance, would like to especially remind profit-seeking enterprises concurrently engaging in investment business that their dividend income received in the middle of the year is temporarily excluded from the filing of tax-exempt sales for the purpose of the current period's business tax, in order to streamline the filing procedures. Once the year is over, the cash dividends and stock dividends from the capitalization of undistributed earnings received during the whole year shall be aggregated and included in the year’s last filing of the tax-exempt sales to calculate the tax payable or overpayment, and the adjusted tax amount shall be calculated according to the selected proportional deduction method or the direct deduction method in accordance with the Regulations for Dual-Status Businesses, and shall be paid together.
The Bureau points out that it is now the time to file business tax return for the November-December period of 2023（until January 15, 2024）, and the business entities concurrently engaging in investment business which adopt the calendar year system should pay attention to include the dividend income received during the whole year in the tax-exempt sales of the year’s last period （November-December period） for the filing of business tax return, and that failure to make adjustments inadvertently may result in tax deficiencies and penalty. If there are any questions, business entities can call the toll-free service hotline 0800-000-321 or go to the Bureau’s website （https://www.ntbk.gov.tw） to make inquiries online using the national tax intelligent customer service “National Tax Helper.”
Providing unit: Sales Tax Division
Contact person:Ms. Chen Contact telephone: (07)7256600 ext. 7310
Contributor: Ms.Zhuang Contact telephone: (07)7256600 ext.7318
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=1bf7edd7013f4eeab2cd48b3aa3c8e02