Profit-making enterprises should pay attention to the accounting regulations when they refund and reduce the commodity tax on the purchase of energy-saving appliances

The Northern District National Taxation Bureau of the Ministry of Finance stated that profit-making businesses that purchase new refrigerators, new air conditioners (heating units), and new dehumidifiers (hereinafter referred to as energy-saving appliances) that comply with Article 11-1 of the Commodity Tax Act and are rated as Class 1 or Class 2 in energy efficiency by the Ministry of Economic Affairs can apply to the National Taxation Bureau for a refund of the reduced commodity tax by submitting relevant documents within 6 months from the date of purchase stated on the invoice or receipt, but they should pay attention to the accounting regulations.

The bureau further explained that according to the Ministry of Finance's Order No. 10904597360 issued on July 9, 2020, the refunded and reduced commodity tax amount obtained by a profit-making enterprise for the purchase of energy-saving electrical appliances is a reduction in the purchase cost or expenses, not income, and should be listed as a reduction in the cost of the fixed assets or expenses of the current year. If the refund of the reduced commodity tax is applied for in the year following the purchase, the refund should be listed as a deduction from the undepreciated balance of the asset at the time of application, and depreciation should be calculated in accordance with Article 52 of the Income Tax Act; if the goods were originally recorded as expenses, the refund should be listed as other income in the application year.

The bureau gave an example, saying that Company A under its jurisdiction purchased a Class I air conditioner or heater for NT$43,000 on September 1, 2013, and listed it as an expense for that year. On February 5, 2014, Company A applied to the National Tax Bureau for a refund of commodity tax and received a refund of NT$1,600. Company A should list the refund as other income for 2014.

The Bureau specifically reminds that if a profit-making enterprise records the purchase of energy-saving appliances as fixed assets, when it obtains a commodity tax refund, it should list the refundable tax as a deduction from the purchase cost in the year of application for the refund, and then provide for depreciation; if it records the purchase as an expense in the current year and applies for a commodity tax refund in the following year, it should be listed as other income in the application year to avoid being punished for tax increases due to inflated depreciation expenses or underreporting of other income. If you still have questions, please visit the bureau’s website ( https://www.ntbna.gov.tw ) to check relevant laws or use the toll-free service number 0800-000321. The bureau will provide consulting services wholeheartedly.

Contact person for press release: Mr. Hua, Section Chief of Business Taxation Group Contact phone number: (03) 3396789 ext. 1360