Business tax declaration rules for gifts given to employees by business owners

Ms. Chen called to ask, the Dragon Boat Festival is approaching, and the company has purchased a batch of gifts to reward employees. Can the input tax be reported on the input unified invoice obtained? Also, do we need to issue a unified invoice when giving gifts to employees?

The Kaohsiung National Taxation Bureau of the Ministry of Finance explained that if a business person gives goods to employees as a reward, and if the goods have been decided to be used for rewarding employees at the time of purchase and are recorded in the relevant accounts, and the input tax paid on the purchase of the goods has been reported as input tax to offset output tax in accordance with Article 19, Paragraph 1, Clause 4 of the Value-Added and Non-Value-Added Business Tax Act, then the goods can be exempted from being deemed as sales and the issuance of a unified invoice for the sake of simplicity.

The bureau further explained that if the goods were not purchased for the personal remuneration of employees, but were recorded in the purchase or related expense accounts, and the input tax paid at the time of purchase had been declared to be deducted from the output tax, when they were later used to remunerate employees, they must be deemed to have sold goods and a unified invoice must be issued to the buyer as the business person at the current price to report and pay business tax. The deduction copy of the unified invoice issued by oneself must be cut off or stamped to be invalid, and the output tax cannot be declared to be deducted.

The Bureau specifically calls on business owners not to deduct the output tax on the input tax of gifts purchased specifically for rewarding employees. If goods originally intended for the main business or ancillary business are converted into gifts to reward employees, since the input tax has already been deducted from the output tax, a unified invoice should be issued with the business owner as the buyer and the business tax should be reported and paid. In addition, the deduction copy of the unified invoice should be cut off or stamped to avoid penalties for tax violations. If you have any questions about the above regulations, you can call the toll-free service number 0800-000-321 for inquiries, or go to the bureau’s website (https://www.ntbk.gov.tw) and use the National Tax Smart Customer Service "National Tax Assistant" for online inquiries.

Provided by: Lingya Taxation Office
Contact Person: Section Chief Xu Junhong Contact Number: (07) 3302058 ext. 6310
Written by: Cai Huirou Contact number: (07) 3302058 ext. 6322