Whenever goods or services are sold, business tax must be paid. It is divided into two major categories based on scale and industry nature:

• General Business Entities (Using Uniform Invoices):
  • The standard tax rate is generally 5%.
  • Every two months (by the 15th of odd months), businesses must file and pay the difference between “output tax” and “input tax”.
• Small-Scale Business Entities (Exempt from Using Uniform Invoices):
  • Businesses with smaller turnover approved by the National Taxation Bureau as exempt from uniform invoices.
  • The tax rate is typically 1% (special industries such as special dining/entertainment sectors are 15% or 25%).
  • Assessed and billed by the National Taxation Bureau on a quarterly basis (every 3 months).

The net profit earned by a company in a year must be settled and filed for corporate income tax in May of the following year.

When a company makes specific types of payments, it acts as a “withholding agent” and must remit the tax to the national treasury and file reports within prescribed deadlines:

• Salary & Professional Practice Income: Employee wages, outsourcing talent fees, etc., which must be withheld monthly or per transaction if they reach the withholding threshold.
• Rent Expenses: When a company leases an office or factory from an individual, a 10% withholding tax must be deducted upon rent payment (if the landlord is an individual residing within the ROC), and withholding certificates must be filed by January of the following year.
• Dividend Income: When a company distributes earnings to shareholders, withholding declarations must also be processed.

If a company makes a profit but chooses not to distribute the earnings to shareholders (retaining them within the company accounts as retained earnings), an additional 5% surtax on undistributed earnings must be levied if left undistributed after a specific period.