萬國法律事務所

Taiwan’s Ministry of Finance recently issued an explanation statement indicating that according to Section 5, Article 7 of the Taiwan Value-added and Non-value-added Business Tax Act (Business Tax Act), the business tax rate is zero for revenue earned from international business charters, including those to China and Hong Kong, of irregular flights by international transportation enterprises.

However, for foreign transportation enterprises that conduct international business charters of irregular flights within the territory of Taiwan, a zero business tax rate is applicable only when the country of the foreign transportation enterprise renders equivalent treatment to Taiwanese international transportation enterprises.

According to the explanatory statement, both revenue from actual flights and fixed revenue from business charters while on standby are eligible for the zero business tax rate. For instance, Company A has signed a contract for business charters with Airline Company B, and according to the contract, the fixed fee for business charters for each month is NT$ 8 million, and each flight will cost NT$ 5 million in addition. The NT$ 8 million fixed fee for business charters and the NT$ 5 million for each actual flight are both eligible for the zero business tax rate.

The Ministry of Finance has also indicated that international transportation enterprises that sign a yearly contract for business charters must submit their certificates of permission for “General Aviation Enterprises” granted by the authorities and relative documents for business charter transactions, such as the contract for business charters, the revenue document from the business charters, and other transaction certificates, to apply for the zero business tax rate on the fixed revenue received from business charters in a month without any actual flights.