Income Tax of a MLM member - Decree No. 10404684260 of the Ministry of Finance
According to Article 14 of the Income Tax Law, an individual participant of a Multi-Level Marketing enterprise (MLM) may earn the following three types of incomes, which are subject to Taiwan Income Tax
1. Business Income: If an individual is a member of MLM and sells goods or provides services for the MLM to consumers, the net profit earned from the aforesaid activities is subject to Income Tax. If the annual cumulated amount of purchase of goods from the MLM company does not exceed NT$77,000 during a year, the net profit is tax exemption. If the retail sales earned by the excess part of the sales profit. The tax collection agency may calculate the sales at the recommended price (reference price) based on the purchase information of the participant. If the above price is not found, it shall refer to the category of commodities purchased by the participant and calculate the sales according to the retail gross profit rate of each profit-seeking enterprise in the same industry for the year. The sales price is calculated according to the sales price, and then the personal profit income is calculated and taxed according to the net profit rate of 6% of the temporary trade surplus.
2. Commission Income: The performance bonus or subsidies received by an individual member from a MLM due to the purchase of goods by his or her downline or the accumulated points (or amount) reaching a certain standard, are categorized as the commission income. In accordance with Article 14, Paragraph 1, Category 2 of the Income Tax Act, the balance after deducting direct necessary expenses or cost is a taxable income. A MLM member may provide eligible expense or cost documents in order to reduce the amount taxable commission income, or pay 20% withholding Income tax.
3. Other income: Any other income received from a MLM company is subject to Income Tax in accordance with Article 14, Article 1 of the Income Tax Law. The Other income is specified in category 10.