The sales of electricity and the transfer of renewable energy are subject to both Value Added Tax (VAT) and Income Tax.
According to the Renewable Energy Development Act and the relevant provisions, individuals or entities that install renewable energy generation equipment and sell the electricity generated by such equipment are considered to fall within the scope of VAT. Their business registration, use of Government Unified Invoices (GUI), and VAT return should be handled according to the following regulations:
1. Business entity, Company: Regardless of their sales volume, all company organizations must register their business, issue GUI, and report VAT return.
2. Sole proprietorships and partnerships: These entities must register their business. The tax authority will determine the applicable rate based on their nature, scale, and reporting capacity, either following the VAT Act Article 10) or Article 13. If the business is subject to assessed VAT and its monthly sales do not exceed the threshold of TWD80,000, it is exempt from VAT.
3. Individuals: (a) If an individual does not have any other sales activity and their average monthly sales in the past six months do not exceed TWD80,000, they may be exempt from business registration and VAT. In this case, the purchasing business (i.e., the electric utility) should report the "Individual One-time Trade Information Declaration Form" when making payments, and the individual should report and pay income tax on the income as part of their comprehensive income tax filing. (b) If the individual does not meet the above exemption criteria, they must register their business and comply with the same rules as a sole proprietorship or partnership.
4. Other non-profit organizations, businesses, or groups: (a) If there are no other sales activities and the average monthly sales in the past six months do not exceed TWD80,000, business registration is not required, and no VAT will be levied. (b) If the above conditions are not met, or if the organization chooses to register despite being exempt, the tax authority will assess the VAT based on its nature, scale, and reporting capacity according to Article 10 or Article 13 of the VAT Act. The organization will also be determined whether to use or be exempt from GUI, based on the relevant regulations. However, if the sales do not exceed the threshold of TWD80,000 per month, no VAT will be levied.
5. Subsequent monitoring by the tax authority: If the tax authority finds, through related data, that an entity exempt from business registration has had average monthly sales exceeding the threshold mentioned above in the past six months, the authority should guide them to register their business.