After a business person sells goods by installment payment with conditions, if the buyer breaches the contract and the business person takes back the goods and resells them, the business person should still issue a unified invoice.

The Taipei National Taxation Bureau of the Ministry of Finance stated that if a business operator sells goods through a conditional installment sale method, and the buyer subsequently fails to pay on time as agreed, the seller will take back the goods. When the business operator sells the goods again, he or she should still issue a unified invoice and pay the business tax.

The bureau explained that according to Article 26 of the Movable Property Secured Transactions Act, a conditional sale refers to a transaction in which the buyer first possesses the subject matter of the movable property and agrees to obtain ownership of the subject matter only after paying part or all of the price or fulfilling specific conditions. Therefore, if a business operator sells goods by means of conditional sales with installment payments, and subsequently the buyer fails to pay on time as agreed, the subject matter is taken back by the seller in accordance with the law, and the ownership of the subject matter still belongs to the seller. When the subject matter is resold, the seller should issue a unified invoice for the resale price and pay the business tax in accordance with the law.

The bureau gave an example, in which Company A sold a machine to Company B in a conditional sale with installment payments, with the sales price being NT$1.2 million (the same below). The two parties agreed to receive payment in six installments and issue a unified invoice, with NT$200,000 in each installment, totaling NT$1.2 million. However, Company B only paid two installments and did not make any further payments. Company A then took back the machine in accordance with the agreement and resold it to Company C at a sales price of NT$700,000. Company A should issue a unified invoice for the resale price of NT$700,000 and pay business tax.

The Bureau reminds that if a business operator who adopts conditional sales with installment payments fails to issue a unified invoice due to the buyer's breach of contract and taking back the goods to resell to others, he or she may voluntarily report and pay the unpaid taxes to the local national tax bureau before being reported or investigated by investigators designated by the tax collection agency or the Ministry of Finance. In accordance with Article 48-1 of the Tax Collection Act, he or she may be exempted from punishment with interest.

(Contact person: Sales Tax Section Chief; Tel: 2311-3711 ext. 1810)