Article 3
A profit-seeking enterprise or an individual shall pay income tax in accordance with this Act, with the exception of cases coming under the following conditions:
1. A profit-seeking enterprise organized in a form of sole proprietorship or partnership.
2. An organization or society which is established for educational, cultural, public welfare or charitable purposes in accordance with Subparagraph 13, Paragraph 1, Article 4 of the Income Tax Act.
3. A consumer cooperative in accordance with Subparagraph 14, Paragraph 1, Article 4 of the Income Tax Act.
4. A public utility enterprise owned by government of various levels in accordance with Subparagraph 19, Paragraph 1, Article 4 of the Income Tax Act.
5. An individual not residing in the territory of the Republic of China or a profit-seeking enterprise having no fixed place of business or business agent within the territory of the Republic of China in accordance with Paragraph 1, Article 73 of the Income Tax Act.
6. A profit-seeking enterprise filing its income tax return due to liquidation in accordance with Paragraph 2, Article 75 of the Income Tax Act; or a profit-seeking enterprise in the event of bankruptcy in accordance with Paragraph 6 of the same Article of the Income Tax Act.
7. A profit-seeking enterprise that does not apply for any investment tax credit in accordance with the laws and does not have any income within the scope of the provisions of any of the Subparagraphs of Paragraph 1 of Article 7 in its annual income tax return or current income tax return.
8. An individual who does not apply for any investment tax credits in accordance with laws and does not have any amount within the scope of the provisions of any of the Subparagraphs of Paragraph 1 of Article 12 in his or her annual income tax return or current income tax return.
9. A profit-seeking enterprise whose basic income as calculated in accordance with Paragraph 1 of Article 7 is equal to or less than NT$ 500,000.
10.An individual whose basic income as calculated in accordance with Paragraph 1 of Article 12 is equal to or less than NT$ 6,000,000.
If the total increase of the consumer price index has reached a figure of 10% or higher compared to the index of the year of previous adjustment, the amount as described in Subparagraph 9 and Subparagraph 10 shall be adjusted accordingly. The adjusted amount shall be calculated in units of NT$ 100,000; the amount less than NT$ 100,000 shall be calculated in units of NT$ 10,000 and then rounded to the nearest NT$ 100,000 using the traditional method. The public announcement of the adjustment and consumer price index as indicated above shall be applied and interpreted mutatis mutandis to Paragraph 4, Article 5 of the Income Tax Act.
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Article 5
In the case that a profit-seeking enterprise or an individual files a income tax return under the provisions of Paragraph 1, Article 71; Paragraph 1 and Paragraph 2, Article 71-1; Paragraph 2, Article 73; Article 74; or Paragraph 1, Article 75 of the Income Tax Act, he or she shall calculate, file and pay income tax in accordance with this Act.
In the case that an individual is exempted from filing his or her annual income tax return in accordance with Paragraph 3, Article 71 of the Income Tax Act, he or she shall still calculate, file and pay income tax in accordance with this Act under the condition that his or her basic income exceeds the amount calculated in accordance with Subparagraph 10, Paragraph 1 of Article 3.
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Article 7
The amount of basic income of a profit-seeking enterprise shall be the sum of the taxable income as calculated in accordance with the Income Tax Act and such income as may fall under the provisions of the following subparagraphs:
1. The amount of income exempted due to suspension of income tax in accordance with Article 4-1 and 4-2 of the Income Tax Act.
2. The amount of income exempted from profit-seeking enterprise income tax in accordance with Article 9, Article 9-2, Article 10, Article 15 and Article 70-1 of the abolished Statute for Upgrading Industries.
3. The amount of income exempted from profit-seeking enterprise income tax in accordance with Article 8-1 of the abolished Statute for Upgrading Industries before the revision of December 31, 1999.
4. The amount of income exempted from profit-seeking enterprise income tax in accordance with Article 28 of the Statute for Encouraging Private Organizations to Participate in Transportation Construction.
5. The amount of income exempted from profit-seeking enterprise income tax in accordance with Article 36 of the Act for Promotion of Private Participation in Infrastructures Construction Projects.
6. The amount of income exempted from profit-seeking enterprise income tax in accordance with Article 18 of the Act for Establishment and Administration of Science Parks.
7. The amount of income exempted from profit-seeking enterprise income tax in accordance with Article 15 of the Act for Establishment and Administration of Science Parks before the revision of January 20, 2001.
8. The amount of income exempted from profit-seeking enterprise income tax in accordance with Article 37 of the Business Mergers and Acquisitions Act.
9. The amount of income exempted from profit-seeking enterprise income tax in accordance with Article 13 of the Offshore Banking Act. However, the amount of income allowed for under this exemption does not include the total revenue derived from a credit extension that shall be taxed at the prescribed withholding rate in accordance with Article 73-1 of the Income Tax Act.
10. The amount of income that is entitled to reduction or exemption from profit-seeking enterprise income tax or that is excluded from the income tax base as may be provided for in such laws as may be promulgated after the implementation of this Act and thereafter announced by the Ministry of Finance.
In the case of an amount of income which is added back in accordance with Subparagraph 1 and Subparagraph 9 of the preceding paragraph after this Act coming into force and with the incurrence of a loss which has been assessed by the collection authority, such loss may be offset against income of the same category respectively in the current year and carried forward in the next following five years.
Where any profit-seeking enterprise sells, starting from the fiscal year 2013, the stocks held for a period of three years or more categorized as the securities regulated in accordance with Article 4-1 of the Income Tax Act, such enterprise, when calculating the amount of income derived from such transactions in the current year, should deduct the losses on the such securities transactions in the same year, and if the previous amount of balance is positive, only one-half of the balance should be added into the current year’s income derived from securities transactions; otherwise, the loss shall apply to the preceding paragraph.
The income which is added back in accordance with Subparagraph 10 of Paragraph 1 and with the incurrence of a loss may apply mutatis mutandis to Paragraph 2 if publicly announced by the Ministry of Finance.
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Article 8
The amount of basic tax of a profit-seeking enterprise shall be the amount of basic income as calculated in accordance with the preceding article, with a deduction of NT$ 500,000, and then multiplied by the tax rate prescribed by the Executive Yuan. The tax rate shall not be more than fifteen percent nor less than twelve percent. The rate of imposition is prescribed by the Executive Yuan in view of economic circumstance.
The calculation for adjustment and public announcement of the amount of deduction as prescribed in the preceding paragraph shall apply mutatis mutandis to Paragraph 2 of Article 3.
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Article 12
The amount of basic income of an individual shall be the sum of the net taxable income as calculated in accordance with the Income Tax Act and the amount which is under the provisions of the following subparagraphs:
1. Income, which is derived from sources outside the Republic of China and is excluded from gross consolidated income, as well as income which is exempted in accordance with Paragraph 1, Article 28 of the Act Governing Relations with Hong Kong and Macau. However, if the aggregate of the two mentioned sources of income in a filing unit is less than NT$1,000,000, it may be excluded from the basic income.
2. Insurance payment received by the beneficiary of a life insurance policy or annuity in which the beneficiary and the proposer are not the same person and the life insurance policy and annuities are contracted after this Act coming into force. However, in the case of payment made upon the death of the insured person, the part of which aggregate of payment made in a filing unit is equal to or less than NT$30,000,000 may be excluded from the basic income.
3. Income derived from transactions of beneficiary certificates of privately-placed securities investment trust funds.
4. The amount of non-cash donations or contributions which is deducted from the gross consolidated income in accordance with the provisions of the Income Tax Act and other laws.
5. (Deleted)
6. The amount of income or deduction which is entitled to reduction, exemption or deduction from the consolidated income tax as may be provided by laws which may be promulgated after the implementation of this Act and thereafter announced by the Ministry of Finance.
The calculation of income on securities transactions under the provision of Subparagraph 3 of the preceding paragraph shall apply mutatis mutandis to Subparagraph 1 and Subparagraph 2, Item 7, Paragraph 1 of Article 14 of the Income Tax Act. The loss incurred from the mentioned securities transactions may be deducted from income derived from securities transactions performed in the same year. However, if no income or no sufficient income derived from security transactions in the same year is available for deduction, the loss may be carried forward for the next three years following the year of the loss. However, the claim of deduction of loss shall apply only to such income and loss as are calculated based on the actual transaction price and the original cost in the years in which the loss incurred and the deduction claimed and only to the amount which has been assessed and recognized by the collection authority.
For the purpose of auditing income derived from securities transactions under the provision of Subparagraph 3 of Paragraph 1, regulations governing the recognition of the price, costs and expenses of securities transactions, as well as the assessment of such in the case of failing to file or present the actual transaction price or the original cost shall be issued by the Ministry of Finance.
In the case of an amount of reduction, exemption or deduction which shall be added back to the base of the basic tax in accordance with Subparagraph 6 of Paragraph 1, and with the incurrence of a loss may apply mutatis mutandis to Paragraph 3 if publicly announced by the Ministry of Finance.
The calculation for adjustment and public announcement of the amount prescribed in Subparagraph 2, Paragraph 1 shall apply mutatis mutandis to Paragraph 2 of Article 3.
The provision under Subparagraph 1 of Paragraph 1 shall come into force on January 1, 2009. However, if the Executive Yuan deems it is necessary to postpone the implementation of the provision in consideration of the needs of economic development, the provision may come into force on January 1, 2010.
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Article 18
This Act shall come into force on January 1, 2006, except as stipulated otherwise; however, the provisions under Article 15 shall come into force on January 1, 2007.
The amended Articles of this Act shall be implemented in fiscal year 2013.
Note: In case of any discrepancy between the English version and the Chinese text of this Act, the Chinese text shall govern.
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