On 4 September 2026, the Taipei National Tax Administration clarified that when a business entity uses construction contract payments to offset overdue penalties, the full contract amount must still be reported via uniform invoices for business tax purposes. This ruling ensures that taxable turnover is not reduced by penalty offsets, aligning with the Value‑Added and Non‑Value‑Added Business Tax Act. The guidance targets construction sector compliance and prevents under‑reporting of sales revenue.
Key Takeaways
- Full Turnover Recognition: The entire construction consideration remains the tax base regardless of any penalty deduction arrangement.
- Invoice Issuance Obligation: Uniform invoices must be issued for the gross amount before offset, ensuring proper VAT collection.
- Compliance Enforcement: Tax authorities will scrutinize construction contracts for such offset arrangements during audits.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement