Small business is lucky to be here! The Taiwan Ministry of Finance announced that it will raise the business tax threshold for small-scale businesses starting from January 1 next year (2025). This is the first adjustment in 17 years since 2007. It is expected that about 120,000 businesses will benefit. , the tax reduction benefits amounted to approximately NT$ 1.068 billion.
First adjustment in 17 years! The threshold for business tax is raised, and it is expected that 120,000 business people will benefit
According to the announcement of the Ministry of Finance, the business tax threshold for sales of goods such as trading industry will be raised from the current monthly sales of NT$ 80,000 to NT$ 100,000; while for sales of labor services such as decoration industry, will be raised from the current monthly sales of NT$ 40,000 to NT$ 50,000.
This adjustment mainly takes into account the rise in prices in recent years, which has led to an increase in sales of business persons who were originally exempted from business tax, which may exceed the current threshold and require business tax. In order to reflect the actual situation, the Ministry of Finance made this adjustment with reference to the approximately 25% increase in the Consumer Price Index (CPI) since 2007.
For business persons who sell goods and services at the same time, the Ministry of Finance stated that the calculation will be based on the total percentage of the sales of goods and services to the threshold. If the total reaches 100%, business tax will be levied. For example, a store sells goods for NT$ 120,000 per month (120% of the threshold of NT$ 100,000) and services for NT$ 20,000 (40% of the threshold of NT$ 50,000). The total of the two is 160%, so it needs to pay Sales tax.
The Ministry of Finance estimates that this adjustment will benefit approximately 120,000 small-scale businesses and increase tax reduction benefits by approximately NT$ 1.068 billion. It will be applicable starting from the first quarter of 2025 (January to March) for business tax collection cases, and the payment period is from May 1 to May 10, 2025. By then, small-scale business operators will be exempted from paying business tax if their verified sales have not reached the adjusted threshold, and they will not receive a payment letter for the assessed tax amount due to the assessed business tax.
This increase in the threshold for business tax can help reduce the tax burden on small businesses and help small businesses continue to develop in the current economic environment.
How to calculate business tax trial calculation? Understand the calculation methods of value-added and non-value-added business tax at once
The full name of business tax is "value-added and non-value-added business tax". It refers to the amount that business operators charge consumers when selling goods or providing services, and the government levies taxes from the sales amount. Business tax can be divided into two types: general tax (value-added business tax) and special tax (non-value-added business tax).
1. General Tax Amount (value-added business tax)
The actual tax payable (or overpaid) is calculated by subtracting the input tax from the business owner's output tax for a certain period. The calculation formula is: Output tax - Input tax = Payable (excess) tax.
For example:
- Output tax (sales): 15,000 × 5% = 750
- Input tax (purchase amount): 10,000 × 5% = 500
- Tax payable: 750 - 500 = 250
2. Special Tax Amount (non-value-added business tax)
Special tax (non-value-added business tax) is calculated by multiplying total sales directly by the tax rate, without considering input tax. The calculation formula is: sales × tax rate = tax payable.
Tax Rate:
| Category | Tax Rate |
|---|---|
| Small scale business person | 1% |
| Insurance industry's reinsurance premium income | 1% |
| Exclusive income from banking, securities and other industries | 2% |
| Banking and insurance industry operating income | 5% |
| Nightclubs, restaurants with entertainment programs | 15% |
| Restaurants and stores with escort services | 25% |
| Agricultural products wholesale market underwriter | 0.1% |
Example Calculation:
The total sales in a certain period is NT$ 100,000. If it is a "small-scale business operator", the tax rate is 1%, and the tax payable is: 100,000 × 1% = 1,000; if it is a "teahouse with escort service", the tax rate is 25%. Tax payable: 100,000 × 25% = 25,000.
Simple Trial Calculation Process:
- Confirm the applicable tax rate and tax type (value-added or non-value-added).
- Fill in the sales volume and input amount (difference calculation is required for value-added types).
- Apply the formula to calculate the tax payable.
- If you need a detailed spreadsheet or example, more specific data can be provided for further calculations.
Source: Taiwan Ministry of Finance
