| Summary: | 碩士 === 國立臺灣大學 === 會計學研究所 === 92 === Provision of “Cross-Border Services” plays an important role in the process of our industry transforming to knowledge-based economy. However, should the payments that obtained as consideration for the services provided outside of our country be attributed to items of “service”, “royalty”, or “other” income? Owing to tax consequences and burden varieties of different items of income, it has long been a dispute between taxing authorities and business taxpayers. Particularly, many cross-border services are performed and completed over Internet in this electronic-based economy, increasing the controversy of their taxation.
This study intends to refer to some existing regulations imposing tax — relating to the payments from the services provided outside of border such as computer software transaction, electronic data processing, and on-line information advising services - explored and performed by developed countries and by important economic and trade organizations. Accordingly, this study further examines our country existing tax laws and regulations and provides some advices for the reference of competent authorities and further researchers. The major conclusions and suggestions are as follows:
1. Establish clear tax rules and regulations to impose the tax on the payments obtained from cross-border services depending on the nature of income, including computer software transactions, electronic data processing services, on-line information advising services and so on, to facilitate the compliance of taxpayers and conform to the principles of imposing tax under the laws.
2. According to the definition of “services”, the payments obtained as consideration for services provided by profit-seeking enterprises are also attributed to “service income.” Therefore, the payments from cross-border services provided by foreign profit-seeking enterprises should be deemed as “service income” even they are attributed to business profits. However, since the services are provided outside of the border, they are not within the taxation scope according to our country existing tax law. Taxing authorities should not, for the purpose of taxation, classify them as “other income” and tax on them as source income from our country, this causing a lot of disputes.
3. This study suggests adopting international common rules with respect to the criteria of classifying cross-border services as royalty income. In other words, the identification of royalties should meet two criteria: a) The licensed intangible properties or know-how can be used in the reproduction of product or process; b) The licensor generally does not need to incur additional expenditures after licensing. Our current practice often uses “transfer of ownership” as the criterion of classifying royalty income, and this practice notion should be adjusted.
4. The income classification of computer software transactions should not be based on the tangibility (such as disk) or intangibility (such as Internet transmission) of the software delivery. In addition, the criteria of the identification of product sale or royalties should not be based solely on the existence of ownership transfer. Instead, the classification should depend on the user of the copied computer program. For example, if the program is offered only to group user, the income could be viewed as income of product sale; if the user has the right to copy and offer to the public, then the related income should be viewed as royalty income.
5. Currently, our taxing authorities classify the electronic services like consultancy, information downloading or software maintenance as services provided within the border of our country on the basis of letter rulings, the income from such services may apply Article 25 of the income tax law. This practice is likely to cause disputes because of the lack of laws imposing tax. To ensure government tax revenue and conform to the principles of imposing tax under the laws, this study suggests modifying the existing law with respect to the identification of the sources of income pertaining to cross-border services through electronic commerce, such as service income (income of services provided electronically by foreign entities to our domestic entities) and royalty income (royalties charged by foreign entities for forming website within the border and offering to outside-border users).
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