|Research by Country/Region
January 22, 2018
|TAIWAN: CUSTOMS, TAXES and DOCUMENTATION REQUIREMENTS for IT PRODUCTS and SERVICES IMPORTS |
A. Is this country a member of the Information Technology Agreement?
B. Customs documentation requirements for IT products
C. Software: duties and taxes, updates, licenses, electronically delivered
D. IT services: tax treatment and other regulations
E. Refurbished, used, or repaired computer equipment imports
A. IS THIS COUNTRY A MEMBER OF THE INFORMATION TECHNOLOGY AGREEMENT?
YES. However, Taiwan will not eliminate its tariffs fully on certain products until 2005. For Taiwan's current tariffs on your specific IT product, call the Department of Commerce's Trade Information Center at 1-800-USA-TRADE.
Signatories to the Information Technology Agreement (ITA) have eliminated their import duties on a wide range of information technology products, including software and computer hardware. For more information on the ITA, and exact tariff elimination schedules of signatories, click here.
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B. CUSTOMS DOCUMENTATION REQUIREMENTS FOR IT PRODUCTS
What are the documentation requirements for the physical import of software? For other information technology products?
Tangible imports of software require preparation of a commercial invoice, import declaration, packing list, airway bill or bill of landing. Importation of PC systems requires the same documents. In addition, EMC (Electromagnetic Compatibility) type-approval is required. This requirement pertains to both locally produced and imported IT equipment.
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C. SOFTWARE: DUTIES and TAXES, UPDATES, LICENSES, ELECTRONICALLY DELIVERED
DUTIES AND TAXES ON SOFTWARE IMPORTS
Are duties assessed on the intellectual property of the software or on the medium on which is it presented?
The current Taiwan Customs Law and regulations do not assess import duties on the intellectual property of software. Duties are based on the cost or value of the carrier medium itself. The customs value shall not include the cost or value of the data, software or instructions, provided that this is distinguished from the cost or the value of the carrier medium. Data or instructions shall not be taken to include sound, cinematic or video recordings. The carrier medium shall not be taken to include integrated circuits, semiconductors or similar devices or articles incorporating such circuits or devices. .
Is customized software treated differently than packaged software?
There is no difference in import treatment between customized and packaged software. However, software data stored in disks or computers, such as commands, data, voice, graphics and other ITA items, including HS codes 85249100, 85249910, 85243100, and 85243920 are imported tax free.
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IMPORTS OF SOFTWARE UPDATES
What are the customs duties and tax implications for software sold with updates when the full sales price, including cost of updates, is shown on the original commercial invoice? Are duties and taxes paid on that amount? What happens when the updates are sent at a later date? Are duties/taxes applied again? If so, based on what value? How should information presented on the commercial invoice for the original and subsequent shipments to avoid paying duties/taxes more than once on a single sale?
Duties/taxes are assessed on the full sales price for software and software updates respectively. The customs invoice should include as much detail as possible and list the values of the software and carrier medium. For example, the value of software and the value of CDs or diskettes should be listed separately. If software is imported without updates, the commercial invoice should reflect only the original software price. If the product is imported with a series of items, the description of each item, such as serial number and version number, should be clearly stated. Software and software updates should be billed separately. If the importer of the software anticipates updates to follow, the individual should state this on the agreement or customs invoice to avoid double taxation of software updates.
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SOFTWARE LICENSES: CUSTOMS CLASSIFICATION, IMPORT DUTIES, TAXES, OTHER
Are software licenses classified in Harmonized System 4907?
The End User License Agreement (EULA) should be classified under HS code 4911 “other printed matter” as Code 4907 is generally applicable for documents with stated value.
Are import duties/taxes applied? If so, on what cost/price base are they levied?
At present, the customs duty rate for all items under HS code 4911 is zero.
If a U.S. license agreement is included in the packaging or is part of the installation/registration of shrink-wrapped software imported from the United States, would that agreement be binding on consumers in your market? If so, would U.S. or local laws pertain?
If the license is registered with the applicable authority in Taiwan, relevant Taiwan laws will protect the corresponding rights for the license. If the license is not registered in Taiwan and the license agreement does not stipulate the governing jurisdiction, applicable Taiwan statutes should be followed.
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SOFTWARE DELIVERED OVER THE INTERNET/ELECTRONICALLY DELIVERED SOFTWARE
Are taxes applied to software delivered to the end-user over the Internet? If so, on what value?
There are no specific restrictions on software downloaded from the Internet. Taiwan’s 5 percent VAT is levied on CIF prices plus import tariffs plus taxes (commodity tax, harbor service fee, etc…). The VAT can be deferred until the products are sold.
Would the situation be different if this software were instead delivered to a distributor who has a license to produce (replicate) and sell the software?
If the software is delivered to a distributor for reproduction and sold to end-users, the payment by the distributor to the original software provider should be considered royalty subject to corporate income tax.
What are the documentation requirements for the electronically delivered import of digitized products (i.e. software, movie downloads) over the Internet or other networks?
There are no documentation requirements for electronically delivered import of digitized products over the Internet or other networks.
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D. IT SERVICES: TAX TREATMENT AND OTHER REGULATIONS
Are services (i.e. training, set-up, etc) relating to the sale of software taxed? If so, at what rate and based on what value?
Services relating to the sale of software are not subject to customs duty. According to the Taiwan Income Tax Law, any Taiwan-sourced income must be taxed. Royalties from patent, trademark, copyright, proprietary and/or confidential techniques and franchising are considered as Taiwan-sourced income. Software license fees are assessed as royalties. If the taxpayer is neither a resident individual nor a business entity with permanent business address in Taiwan and the service is used in Taiwan, the Taiwan authorities will withhold 20 percent income tax from the payment whether delivered by Internet or physically shipped to users. Information services include software modification, configuration, installation, testing and training that assessed 3.75 percent of business income tax. If the product or service is used in Taiwan, royalties are assessed a 20 percent withholding tax.
Are U.S. IT solution providers permitted to send personnel into the country to set up hardware/software-related systems?
U.S. information technology solution providers are permitted to send personnel to Taiwan to configure hardware/software systems under the following conditions: 1) The employer or individual can apply for a 2-year valid working permit stating the employees' educational background, work experience, expertise and salary information; and 2) If the professional needs to stay in Taiwan more than six months, he/she can apply for a resident visa. To legally provide services in Taiwan, the U.S. personnel should apply for a work permit from the Ministry of Economic Affairs, Investment Commission Section.
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E. REFURBISHED, USED, OR REPAIRED COMPUTER EQUIPMENT IMPORTS
1. REFURBISHED AND USED COMPUTER EQUIPMENT
Is the import of refurbished computer hardware, parts, and accessories (including toner cartridges) permitted? Is special labeling required?
The import of refurbished and used computer hardware, parts and accessories is permitted and does not require special labeling.
If so, what are the documentation requirements? What value should be shown on the invoice?
Documentation requirements are the same as new computer products. An import declaration and commercial invoice for its value and description (used or refurbished computer) are required.
How are duties and taxes assessed?
There are no specific guidelines regarding the valuation of refurbished products. Taiwan Customs will levy the import duty based on the value reported on the commercial invoice and they will also inspect the condition of the said products to determine whether the value reported on the invoice and import declaration are reasonable. The imports of certain computer products or peripherals are subject to legal import inspection announced by the Bureau of Commodity Inspection and Quarantine.
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2. REPAIRED COMPUTER EQUIPMENT
Are duties and taxes assessed on the re-import of repaired computer equipment?
Pursuant to the Taiwan Customs Law, upon re-importation of machinery, apparatus and appliance sent abroad for repair or assembly, the actual cost of repair or assembly shall be taken as the basis for calculating valuation. This rule shall apply to the repair of computer equipment.
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This response was prepared by the American Institute in Taiwan in February 2003. For further clarification please contact:
American Institute in Taiwan
Special Notes: The above information is intended to serve only as unofficial guidance. In seeking to obtain government rulings in specific cases, it will often be necessary to refer to special laws, separate regulations and announcements, and case-by-case decisions by the government. Beyond the general guidelines shown above, legal counsel should be retained at an early stage of consummation of a major procurement contract, and before entering into any legal commitments.
This page was last updated on 06/18/2009. This site is operated by the Office of Technology and Electronic Commerce (OTEC) division of the International Trade Administration, U.S. Department of Commerce.