What is an Invoice-Exempt Business? (Small-Scale Business Definition)

What is commonly referred to as “invoice-exempt” is formally known in Taiwan tax law as a “Small-Scale Business” (小規模營業人). These businesses are not required to file regular bimonthly business tax returns (5% VAT). Instead, the National Taxation Bureau assesses their sales volume every quarter (3 months) and levies a fixed business tax at a favorable 1% tax rate.

Note that “invoice-exempt” does not mean completely tax-free; rather, taxes are calculated via official government assessments and paid quarterly through issued tax bills.

Core Application Conditions & Revenue Thresholds

To apply for and maintain invoice-exempt status, businesses must meet the following criteria:

• Average Monthly Sales Under NTD 200,000: Under current regulations, micro-enterprises, studios, or retail vendors with an average monthly revenue below NTD 200,000 are typically classified as small-scale businesses by the tax bureau. If single-month revenue consistently exceeds NTD 200,000, the tax authorities have the authority to upgrade the business to issue standard uniform invoices.
• Target Customers Are Primarily Individual Consumers (B2C): Invoice-exempt businesses mostly serve the general public. If transactions are primarily conducted with corporate clients or organizations (B2B) that require input tax deduction receipts for accounting purposes, clients will usually request official uniform invoices.
• Physical Business Presence or Legal Setup: When registering the business entity, a valid business address must be provided (e.g., a lease agreement or property ownership certificate). The tax bureau may conduct an on-site inspection to verify that the operation has a small scale, simple equipment, and no hired employees.

Industries Excluded from Invoice Exemption

Not all industries are eligible for invoice exemptions. According to Ministry of Finance regulations, certain sectors with special operational characteristics, high unit values, or professional services are legally mandated to issue uniform invoices and cannot register as small-scale businesses. These include:

• Professional and technical services (e.g., CPA firms, law firms, land scriveners/notaries).
• Hotels, inns, large restaurants, or scaled catering businesses.
• Wholesale businesses and import-export trading companies.
• Internet businesses (e.g., self-hosted e-commerce websites or major platforms) exceeding designated sales thresholds.
• Other specialized industries designated by the Ministry of Finance (e.g., karaoke/entertainment venues, saunas).

Application Process & Key Considerations

To secure invoice-exempt status, applications are typically submitted concurrently with Business Registration (Commercial Registration):

1. Complete Business Registration: Register your business entity with the local municipal government (e.g., Taichung City Government or Taipei City Government).
2. File for Tax Registration: Submit your tax registration application to the National Taxation Bureau, requesting or checking the option for “invoice exemption.”
3. Tax Bureau Review: Tax officers will review the operating location, equipment, and scale, or conduct an on-site inspection.
4. Approval Notice: Once approved, the tax bureau will issue an official notice designating the business as a small-scale business and send out quarterly tax assessment bills.

Important Note: If business expands later and monthly revenues exceed NTD 200,000, or if tax authorities/reports discover actual sales exceed thresholds, the tax bureau will revoke the invoice exemption and mandate the use of uniform invoices.