1. Is there GST (or a similar tax) in Taiwan?
Yes, Taiwan has a VAT regime which is a broad-based consumption tax levied on the import of goods and supply of goods and services in Taiwan. The prevailing VAT rate in Taiwan is 5%.
2. What fees are subject to GST?
Jade E-Services Singapore Pte. Ltd. (“ZALORA Singapore”) manages and operates the Taiwan platform. As the said entity is GST-registered in Singapore, all fees charged to you for selling on the Taiwan platform will be subject to Singapore GST rules. In general, marketplace and related fees are subject zero-rated, i.e., 0%, and ZALORA Singapore will issue a Tax Invoice accordingly.
ZALORA Singapore is not VAT registered in Taiwan and thus does not impose a further 5% VAT on our fees to marketplace sellers selling into Taiwan.
However, goods imported into Taiwan from overseas may be subject to VAT at 5% and import duties at varying rates depending on the HS code of the product.
3. I am not a Taiwan entity, what taxes will I be subject to if I sell into Taiwan?
In general, the fees charged to you are zero-rated. Please also refer to Question 2.
In addition, if you are under FBZ or IDS (Zalora appointed 3PL only), a 5% import VAT and 10% customs duties will be charged on all import of goods exceeding TWD 2,000, and this will be charged to you via Import Fees.
4. I am a Taiwan entity, can you provide an example of how the fees are calculated and amount remitted to me?
If the agreed commission rate is 15%, and the price of the product sold is TWD1,000, commission fee charged to the seller will be 15% x TWD 1,000 = TWD 150
Amount remitted to you will be as follows:
Sales = TWD 1,000
Less commission = TWD 150
Plus 20% withholding tax on commission = TWD 30 (if withholding tax is borne by ZALORA under the Agreement; to exclude if withholding tax is borne by Taiwan entity under the Agreement)
Net payout = TWD 880
5. I am a Taiwan entity and I am required to withhold tax on payments to you under Taiwan domestic laws. How can I do that?
All our contracts are structured such that any withholding tax applicable on our Fees should be borne by the Sellers and not by ZALORA. Therefore, if the commission fee charged is TWD1,000, Sellers payment to ZALORA will remain as TWD1,000. In addition, Seller will need to report and pay to the Taiwan tax authorities the 20% withholding tax required under the law. If a gross-up is required under Taiwan tax laws, then Seller will pay 20% x TWD1,000/0.8 = TWD250 to the Taiwan tax authorities. If no gross-up is required, then seller will pay 20% x TWD1,000 = TWD200.
However, due to historical reasons, ZALORA bears the withholding tax for some contracts. Using the same scenario as above, if the commission fee is TWD1,000, Sellers payment to ZALORA will be TWD800 and Sellers will report the balance TWD200 to the Taiwan tax authorities.