The Regulations herein are set forth pursuant to Paragraph 3, Article 11 of the Commodity Tax Act.
Except for central and automobile air conditioning systems that are imported in whole units (sets) with commodity tax levied by the whole unit (set), imported or domestically produced air handling units or (refrigerant) compressors for the manufacture of central or automobile air conditioning systems shall be levied commodity tax on an ad valorem basis pursuant to the Regulations herein.
Central air conditioning systems shall be levied commodity tax by the value of taxable components according to the following rules at the time their air handling units or compressors are imported or released from the domestic factory:
The taxable value of the whole unit of a non-reciprocating central air conditioning system shall be the value of its air handling unit plus 35% (i.e. 1.35 times the value of the chiller).
The taxable value for the whole unit of a reciprocating central air conditioning system shall be the value of its air handling unit plus 50% (i.e. 1.5 times the value of the chiller).
Air handling units hereof are classified into two categories:
Condensing units: including compressor, motor, condenser, liquid receiver, control panel, and frames.
Water chillers: including condenser, chiller, refrigerant control valve, and window.
For central air conditioning systems where the compressor is independently imported or domestically produced for assembly, the value of the air handling unit is first calculated by the value of the compressor plus a percentage as stipulated below, and the taxable value of the air conditioning system shall be calculated by the provisions in Items (1) and (2) above:
If the compressor is less than 20 HP, the value of the air handling unit shall be the value of the compressor plus 500% (i.e. 6 times the value of the compressor).
If the compressor is over 20 HP, the value of the air handling unit shall be the value of the compressor plus 250% (i.e. 3.5 times the value of the compressor).
If a manufacturer that imports or purchases compressors from another manufacturer for making air handling units of central air conditioning systems follows the provisions stipulated in Article 75 of the Regulations for the Collection of Commodity Tax instead of the provisions above in tax reporting, it should apply to the tax authority for computation of commodity tax pursuant to Article 3 herein. Notwithstanding the foregoing, a manufacturer may not adopt more than one method of tax computation, and may not apply for change of method within three years after a method has been approved.
When a manufacturer uses imported or domestically purchased air handling units or compressors for the assembly of refrigerating equipment, and has a certificate from the competent authority to prove that such component is not used for the production of air conditioning systems, the air handling unit or compressor is exempted from commodity tax. The manufacturer shall follow the provisions below in the application for tax exemption or refund:
Prior to purchase or assembly of the refrigerating equipment, if a manufacturer that has registered its factory or obtained a permit for factory establishment can provide documentation evidencing the definite purpose of the purchase, it may apply to the Industrial Development Bureau under the Ministry of Economic Affairs for the issue of a proof document and use it to apply for tax-exempt import or factory release. For importers other than the manufacturer, the importer shall apply to the local tax authority for provision of security, and after receiving such security, present the proof documentation to the Customs for release without tax payment. After the refrigerating equipment is assembled, the importer will present the proof documentation for the refrigerating equipment issued by the tax authority of the location where the equipment is assembled to the tax authority that provides the security to close the case.
When a manufacturer applies for tax refund for air handling units or compressors used for the assembly of refrigerating equipment that has had commodity tax paid on it, it should, after completing the assembly, request the tax authority at the location where the equipment is assembled to make an inspection. After the tax authority conducts the inspection and issues proof documentation, the manufacturer may present the documentation together with a tax payment certificate or receipt to the agency that collected the commodity tax to apply for tax refund or return of deposit.
For air handling units or compressors imported for use in the assembly of refrigerating equipment for fishing boats, the Customs will approve the exemption of commodity tax if a duty-exemption document issued by the Council of Agricultural Affairs is presented.
For air handling units or compressors imported for use in the assembly of refrigerating equipment by a shipyard, the Customs will approve the exemption of commodity tax if a proof document issued by the Industrial Development Bureau, MOEA is presented.
If the aforesaid tax-exempt air handling unit or compressor is not used according to the originally declared purpose, or transferred so that its tax exemption status no longer applies, the user that changes the purpose of usage or the transferor shall repay the tax to the local tax authority. Otherwise the provisions of Item 4 of Article 32 of the Commodity Tax Act shall apply.
The taxable value of the whole unit of an automobile air conditioning system shall be the value of its refrigerant compressor plus 700% (i.e. 8 times the value of the compressor) and commodity tax shall be paid at the time the compressor is imported or released from the domestic factory.
The value of an air handling unit or refrigerant compressor for a central air conditioning system and that of a refrigerant compressor for an automobile air conditioning system shall be the duty-paying value as determined by the Customs plus duty. In cases where the aforesaid products are manufactured by domestic producers, the value of which shall be the selling price excluding the commodity tax.
The Regulations herein are in force from the date of promulgation.
The implementation date of amendment to the Regulations shall be determined by the Ministry of Finance.