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Amusement Tax

The Amusement Tax is a special sales tax which is collected from the paying consumers either included in the admission or taxed separately; it is also referred to as an opportunity tax since the timing of the tax can be momentary. The amusement tax varies from other types of taxes, in that the taxpayer pays to get entertained, and the tax is collected by the facility operator or owner of an entertainment venue, facility or event on behalf of tax agencies. The amusement tax was once intended to maintain social order and preclude lavish spending; this was implemented by planning heavy taxes on places such as dance halls and dance clubs in order to improve social conditions. Now, with our improved living standards, more and more people are demanding more healthy recreations. A brief description is provided to inform taxpayers about the state of amusement tax and tips on more tax savings.

Part 1 Amusement Tax saving tips:

I. Methods of amusement tax levying

  1. Voluntary tax declaration/payments
  2. Assessed levy
  3. Interim public performance - consisting of paid interim public performance and free interim public performance

II. Amusement Tax Incentives

  1. Amusement Tax collectors (collecting agents) who pay the tax collected to the Treasury within the prescribed time limit shall be given, by the competent authorities a pecuniary award as incentive equivalent to 1% of the amount of the tax paid. The abovementioned pecuniary award shall be deducted by collecting agents from the tax payable each time they make a tax payment.
  2. If the amusement tax deadline has been set on the 10th, no incentives will be awarded if the payment is made on the 11th. However, if the deadline happens to fall on a Saturday or public holiday, the 1% incentive will still be awarded if the tax payment is made on the following business day. If award debits are still made after the deadline, the agency will retroactively recall the incentive as required by law.

III. Amusement Tax Exemptions

  1. All kinds of amusement provided by educational, cultural, public welfare, charitable institutions or organizations conformable to a public welfare corporation or a foundation under the General Provisions of the Civil Law or duly registered with competent authorities in accordance with other related laws or regulations, where the total proceeds are exclusively used by the said institutions or organizations
  2. All kinds of amusement, where the total proceeds, after deducting necessary expenses, are used for disaster relief or military morale purposes, provided, however, that the deductible expenses shall not exceed 20% of total proceeds
  3. All kinds of amusements, cultural and recreational activities provided temporarily and free of charge for employees by institutions, organizations, privately-owned or publicly-owned enterprises, schools and other organizations
  4. Outdoor theaters staged by the private sector as deity offerings, religious pilgrimages and national celebrations are exempt from the amusement tax (as per Article 12 of the Taipei Municipal Amusement Tax Law).
An organizer that falls under the subheadings 1 and 2 stated in the preceding section is required to file a petition before the activities start. To be eligible to qualify for the exemption status, the applicant must file a conclusive report within five days after the events have finished. Within the deadline, accounting records and admission tickets approved by governing authorities or proof of documents must all be turned in to tax collection authorities for tax exemptions. Tax from the event will be exempted after a satisfactory review.

IV. Provisions on Amusement Tax Reductions
Taxpayers of the amusement tax are those who pay the prices to enjoy the amusement. Providers or sponsors of sites, equipment or activities for entertainment act as collecting agents. Collecting agents that have been authorized by the Executive Yuan's Council of Cultural Development and qualified as cultural and arts enterprises may allow the tax to be reduced by one-half (as per provisions cited in Article 7 of the Measure for Exemption and Waiver of the Business Tax (VAT) and Amusement Tax by Cultural and Arts Enterprises) To qualify for this tax deduction, a collecting agent is required to file for an approval of reduced tax levy with the "Executive Yuan's Council of Cultural Development" one month prior to a scheduled performance (where an exemption will be given to the Business Tax and one-half to the amusement tax). Before the activities or performance starts, bring the approved documents authorized by the "Executive Yuan's Council of Cultural Development" to tax collection authorities for tax reduction or exemption registration. After the event, bring all required documents on tax reduction or exemption previously issued by the governing authorities to a tax collection agency for tax deductions.

Part 2 Ways to protect your equity and avoid being penalized for erroneous filing:

I. Penalties to Amusement Tax collectors who fail to apply for registration on collecting Amusement Tax Collecting agents or an operator in the amusement industry who fails to apply for registration with competent authorities prior to the opening of business, relocation, removal, switching to a new business, reclassification, alteration, reorganization, merger, transfer of ownership, liquidation or closure, or suspension of business shall be liable to a fine of not less than NT$15,000 but no more than NT$150,000.

II. Penalties to Amusement Tax collectors who under-collect, under-collect, fail to collect, or provide fake reporting on Amusement Tax Amusement tax collectors who refuse to execute the amusement tax collection or attempt to under-collect, under-report or provide forged reporting will not only face retroactive collection, but also be liable to a fine of five to ten times the amount of tax payable, and business operations may also be suspended.

III. Penalties to Amusement Tax collectors who fail to pay tax within the prescribed time limit. Amusement tax collectors who fail to pay the amusement tax in full on or before the last payment date, as designated on the tax payment notice, are subject to a late payment fee of 1%, imposed for every two full days beyond the deadline (except the portion for educational purpose). For those that fail to make tax payments within 30 days after the deadline, the matter shall be referred to the courts for enforcement.

IV. Penalties to interim public performance that fail to register for tax collection proceedings An organizer staging an interim entertainment venue who fails to apply proper registration and tax collection proceedings will be punished by a fine of not less than NT$1,500 but no more than NT$15,000, pending further punitive action by governing authorities.

Part 3 Check for under-reported tax and paying tax retroactively * Payment of all amusement tax if discrepancies should arise that contradicts a tax exempt status
A variety of entertainment/amusement venues staged by organizations, groups, social welfare organizations or foundation organizations, in which the revenue has not been entirely directed into the core business or it is staged for disaster relief or military morale purposes: if the essential expenditure should exceed 20% of the ticket revenue it shall be subjected to a mandatory recall of repaying the entire sum of taxable amusement tax.