Recovering Overpaid Value-added tax (VAT) in Taiwan: A Guide for Foreign Business Owners

Del Sol CPA
Jun 25
3 min read

At Del Sol CPA & Associates, we understand the unique tax challenges foreign businesses face in Taiwan. Many clients come to us after encountering issues with previous accounting firms—most commonly, overpaid VAT due to inaccurate filings. The good news? There’s a path to recovery—and we can help.

Key Takeaways

Q: How can I get the overpaid VAT back?

A: You could apply for a refund through the Taxation Bureau, but only if you can demonstrate that your sales were not subject to VAT and that the overpayment resulted from incorrect filing.

Q: The difference between Zero-Tax vs. Tax-Exempt?

A: Zero-rated tax allows deduction of input tax, leading to potential refunds. Tax-exempt sales don't allow tax deductions or refunds.

Case Study: Saving Through Expertise

One of our clients had previously engaged another CPA firm to handle the company’s accounting. This client initially reached out to us for advice on personal investment and financial planning in Taiwan.

During our consultation, we conducted a comprehensive review of his business financials and discovered a critical error: the company's services, primarily provided to overseas clients, qualified for a zero VAT rate—yet had been incorrectly filed under the standard rate.

The result? He had unknowingly overpaid VAT by nearly NTD 150,000.

We worked swiftly to prepare the necessary amendment filings and initiate negotiations with the Taxation Bureau.

⚠️ Note: Approval for amended filings is subject to the discretion of local tax agents, whose interpretations and preferences can vary. That's why a thoughtful approach and clear communication are essential.

Understanding Taiwan's VAT System

In Taiwan, most businesses are subject to a standard 5% VAT. However, certain goods and services are exempt or zero-taxed, including:

Exported goods.
Services relating to export or services provided in the R.O.C. but used in a foreign country.
Goods sold to outbound or transit passengers by duty-free shops established under applicable law.
Goods or services sold to a bonded zone business entity for its operational use.
International transportation; however, foreign transport enterprises engaging in international transport within the territory of the R.O.C. shall qualify for the zero tax rate only if reciprocal treatment, or exemption from similar taxes, is given to international transport enterprises of the R.O.C. by the foreign country in which the foreign enterprise is incorporated.
Vessels and aircraft used in international transportation and deep sea fishing boats.
Sales of goods and maintenance services to vessels and aircraft used for international transportation and deep sea fishing boats.
Goods sold by a bonded zone business entity to a taxable zone business entity and exported directly without being transported to the taxable zone.
Goods sold by a bonded zone business entity to a taxable zone business entity for export and placed in a bonded warehouse or logistics center administered by an enterprise inside a free trade zone or by Customs.

Documentation Required for Zero-Rated VAT Claims

If you qualify for the zero-tax rate, you must retain and present the following:

Official sales fapiao
Your client invoice indicating charges
Inward remittance memo (匯款水單) issued by your bank

Why It Matters

Our client's case underscores the importance of detailed tax planning and compliance. By changing to our firm, the client ensured better oversight, smoother reporting, and reduced tax burden—all achieved through clear guidance and ongoing support from our experienced team.

Transferring documents from a previous accountant might seem daunting, but our team ensures a smooth and compliant handover. We value clear communication and prioritize timely responses to your concerns.

Let Us Help You

At Del Sol CPA & Associates, we go beyond bookkeeping and accounting. Led by CPA Mr. Kevin Weng, our team provides personalized, bilingual tax and financial guidance tailored to foreign investors and business owners in Taiwan.

If you’ve encountered VAT filing issues or want to ensure your business is optimized for compliance and savings, contact us today. Let us help you reduce tax stress—and focus on growing your business with confidence.