Article 5
The personal exemption for consolidated income tax shall be limited to NT$ 60,000 each person per year. If the total increase of the consumer price index has reached a figure of 3% or higher compared to the index of the year of previous adjustment, the exemption shall be adjusted accordingly. The adjusted amount shall be calculated in units of NT$1,000; if the amount is less than NT$1,000, it shall be calculated as a unit of NT$1,000 and rounded up or down to the nearest NT$1,000 using the traditional method.
The tax brackets and rates of consolidated income tax are as follows:
1. If the annual total net consolidated income is less than or equal to NT$520,000, the tax rate shall be 5%.
2. If the annual total net consolidated income is above NT$520,000 to NT$1,170,000, the income tax payable shall be NT$26,000 plus 12% for the portion of income more than NT$520,000.
3. If the annual total net consolidated income is above NT$1,170,000 to NT$2,350,000, the income tax payable shall be NT$104,000 plus 20% for the portion of income more than NT$1,170,000.
4. If the annual total net consolidated income is above NT$2,350,000 to NT$4,400,000, the income tax payable shall be NT$340,000 plus 30% for the portion of income more than NT$2,350,000.
5. If the annual total net consolidated income is above NT$4,400,000, the income tax payable shall be NT$955,000 plus 40% for the portion of income more than NT$4,400,000.
If the total increase of the consumer price index has reached a figure of 3% or higher compared to the index of the year of previous adjustment, the tax brackets as described in the preceding Paragraph shall be adjusted accordingly. The adjusted amount shall be calculated in units of NT$10,000; if the amount is less than NT$10,000, it shall be calculated as a unit of NT$10,000 and rounded up or down to the nearest NT$10,000 using the traditional method.
The exemption and the tax brackets for consolidated income tax shall be publicly announced by the Ministry of Finance in accordance with the preceding Paragraphs 1 & 3 before the beginning of each year. The consumer price index as indicated above shall be publicly released by the Directorate-General of Budget, Accounting and Statistics, Executive Yuan based on the average consumer price index for 12 months up to the end of October of the previous year.
The minimum taxable amount and rates for profit-seeking enterprise income tax are as follows:
1. If the total taxable income of a profit-seeking enterprise is NT$120,000 or less, the profit-seeking enterprise is exempt from tax.
2. If the total taxable income of a profit-seeking enterprise is more than NT$120,000, the income tax rate shall be 20%. However, the income tax payable shall not exceed one half of the portion of taxable income more than NT$120,000.
3. Where the total taxable income of a profit-seeking enterprise is more than NT$120,000 but not more than NT$500,000, the income tax rate shall be in accordance with the following provisions and shall not apply the preceding Subparagraph. However, the income tax payable shall not exceed one half of the portion of taxable income more than NT$120,000.
(1) The income tax rate for taxable year 2018 shall be 18%.
(2) The income tax rate for taxable year 2019 shall be 19%.
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Article 14
The gross amount of consolidated income of an individual shall be the aggregate of the following categories of income for the whole year:
Category 1:
Business Income: the dividends received by each shareholder of a company, the earnings received by each member of a cooperative, the earnings received by each investor of other juristic person and the earnings payable each year to each partner of a profit-seeking partnership, the earnings derived in each year by a sole proprietor from the operation of business, and the earnings derived by an individual from incidental trading activities shall all come under this Category of income.
The earnings payable to a partner or the earnings derived by a sole proprietor from the operation of business shall be the assessed amount of the profit-seeking enterprise income.
Category 2:
Income from professional practice: any income of an individual from professional practice or performances after deduction of the rental for or depreciation of the place of business, depreciation of and repairing expenses for the facilities and equipment required for business, or the cost of medications, supplies, etc. sold to clients, salaries and wages for employees required for business, travelling expenses for practicing the profession and other direct and necessary expenditures, shall be the actual amount of income in this category.
Any individual engaged in professional practice shall at least keep a journal as his accounting book to provide detailed entries of all the operating revenues and expenses. For all business expenditures, documents of positive evidence shall be secured. The documents of evidence and account book shall be kept for a period of at least five years. Measures regarding the setting up, acquisition, and maintenance of the documents of evidence and account books and other related matters shall be prescribed by the Ministry of Finance.
Depreciation of buildings, facilities, and equipment used in professional practice shall be calculated in accordance with the Table of Service Life of Fixed Assets. The relevant provisions with respect to profit-seeking enterprise income tax of this Act shall be applicable, mutatis mutandis. Measures regarding the inspection of the documents of evidence, recognition of the revenues and expenses from professional practice and their account books and other related matters shall be prescribed by the Ministry of Finance.
Category 3:
Income from salaries and wages: any income from salaries and wages of public functionaries, teachers, military personnel, policemen, staff employees and workers of public and private enterprises and any income earned by persons rendering services:
1. Income from salaries and wages shall be all salaries and wages earned for performing duties or doing works;
2. Salaries and wages as provided in the preceding subparagraph shall include salaries, stipends, wages, allowances, annuities, cash awards, bonuses and all kinds of subsidies, whereas, the money received for performing duties for the employer as traveling expenditures, daily allowance and overtime pay not in excess of the prescribed amounts and the incomes which are exempt from income tax as prescribed under Article 4 of this Act shall be excluded.
3. The lump sum of the voluntary pension contribution and the voluntary annuity insurance premiums according to the Labor Pension Act, up to 6% of by an employee’s monthly wage or salary may be deducted from the employee’s taxable income from salary or wage in the year concerned; the voluntary annuity insurance premiums made by an employee shall not apply to the insurance premiums deduction under Article 17.
Category 4:
Income from interest: any income from interest on public debts, corporate bonds, financial, various kinds of short-term commercial papers, deposits and other loans:
1. Public debts shall include bonds, treasury notes, securities, and other notes issued by governments of all levels;
2. Prize money from raffle-savings in excess of the amount of savings shall be deemed as income from interest on deposits:
3. Short-term commercial papers shall include one-year or less treasury bonds, transferable time deposit certificates issued by banks, promissory notes and bills of exchange issued by companies and government-owned enterprises, and other short-term certificates of indebtedness approved by the authority in charge of the specific end enterprise.
The portion of the pecuniary amount realized by the short-term commercial papers at their maturity in excess of the selling price at their initial issuance shall be deemed as income from interest such income shall not be added to the gross consolidated income, but withheld in accordance with the provision of Article 88.
Category 5:
Income from lease and from royalties: any income from lease of property, from utilization of money obtained as the price of a lien on property, or from royalties on patents, registered trademarks, copyrights, secret formulas, and all kinds of franchise made available for use by others:
1. Amount of income from lease of property and from royalties shall be the whole year’s income after deduction of necessary losses and expenditures;
2. Any income derived from long-lasting tenant right and superficies created for fixed terms shall be deemed as income from lease;
3. For money received in the form of rental deposit or in other similar forms for lease of property, and for money received as the price of a lien created on property, to calculated the income from lease the prevailing bank interest rate for one-year-term deposit shall be used as a basis;
4. Income tax on revenue from lease calculated in accordance with the local prevailing rental standard shall be paid for properties lent to others for use, unless it can be verified that no payment is made and the properties involved are not being used for business or for carrying out professional services;
5. The revenue from lease will be upward adjusted by the collection authority according to the local prevailing rental standard if the contracted rental of the lent properties was obviously too low in comparison with the local prevailing standards.
Category 6:
Income from self-undertaking in farming, fishing, animal husbandry, forestry and mining-amount of income shall be the whole year’s income after deduction of necessary expenses.
Category 7:
Income from property transactions: any income derived from transactions of property and right:
1. Where the property or right was originally acquired at a price, amount of the income shall be the transaction price after deduction of original cost and all expenses necessary for acquisition, improvement and ownership transfer of that asset;
2. Where the property or right was originally acquired through succession or donation, amount of the income shall be the transaction price after deduction of value prevailing at time of succession or donation and all expenses necessary for acquisition, improvement and ownership transfer of that property or right;
3. One-half of the amount of income of an individual derived from transactions in registered stocks or registered corporate bonds issued by a company limited by shares, or public bonds issued by governments of all levels, or development bonds issued by banks under the approval of government, if the individual has held such stocks or bonds for a period of one year or longer, shall be considered as a part of his income in the taxable year, while the other one-half shall be exempted from income tax.
Category 8:
Income from contests and games and from prizes and awards won by chance: any income derived from prizes or awards in contests or lotteries shall be included in the category:
1. All expenses necessary for participating in contests or games are permitted to be deducted;
2. All costs necessary for participating in lotteries are permitted to be deducted;
3. Prize money from lottery tickets under the auspices of the government, except that tax payable shall be withheld in accordance with the provision of Article 88, shall not be included in the gross consolidated income.
Category 9:
Separation income: The retirement pay, severance pay, separation pay, resignation pay, life-time pension , the old-age pension not covered by insurance benefits and the insurance payment made under annuity insurance according to the Labor Pension Act received by a person, but not including the following: receipt of the savings made by said person from taxable income of his or her salary every year; the insurance payment from the voluntary annuity insurance premiums according to the Labor Pension Act every year; and/or the interest accrued from the savings and the premiums.
1. If received in one lump sum, the income amount is calculated as follows:
(1) If the total amount received in one lump sum is less than NT$150,000 multiplied by the number of service years at the time of separation, the income amount shall be considered zero;
(2) If the total amount received in one lump sum is more than NT$ 150,000 multiplied by the number of service years at the time of separation, half of the portion of the amount over NT$ 150,000 but less than NT$ 300,000 multiplied by the number of service years at the time of separation shall be the income amount;
(3) The portion of the amount over NT$ 300,000 multiplied by the number of service years shall totally be considered the income amount.
The last digit of the number of service years, if less than 6 months, shall be calculated as half a year and, if over 6 months, as one year.
2. If received by installments, the income amount shall be the balance of the total amount of all installments received in one year with the deduction of NT$650,000;
3. If portion of the separation income is received in one lump sum and portion by installments, the deductible amount mentioned in Item 2 above shall be calculated in proportion to the amounts received in one lump sum and by installments respectively.
Category 10:
Other income: amount of any income other than the aforesaid after deduction of necessary expenses and costs. However, the reward for information or accusation and income from transactions in structured products between individuals and securities firms or banks shall not be added to the gross consolidated income, but withheld in accordance with the provisions of Article 88.
Where any of the aforesaid categories of income is earned in kind, in the form of valuable securities or in foreign currencies, the amount of income shall be computed at the prevailing price or exchange rate prescribed or recognized by the government or in the absence thereof, at the respective actual local value at time of receipt.
Any variable income such as that derived from self-undertaking in forestry, or from old age pensions or retirement pensions or alimony paid in lump sum, or remuneration in lump sum distributed after each trip to the employed for fishing in the high seas or compensation received for returning the leased farm land in accordance with the provision of Article 77 of the Statute for Equalization of Urban Land Rights, among an individual’s gross consolidated income may be subject to taxation at a half of the amount thereof in the taxable year of income.
If the increase of consumer price index accumulates to 3% or more over the figure last adjusted, the amounts stipulated in Category 9 of Paragraph 1 above shall be adjusted accordingly and the adjustment shall be made at the rate of NT$1,000 as a basic unit with the hundreds rounded off if the adjusted amount is less than NT$1,000. As to the method of publication and the consumer price index mentioned above, the provisions in Paragraph 4, Article 5 hereof shall apply.
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Article 14-3
In case any individual person, profit-seeking enterprise, or organization or institution which is established for educational, cultural, public welfare or charitable purposes, is discovered to have improperly evaded or reduced the tax burden for himself/ herself/ itself or for other person(s) by means of transfer of funds or shareholder’s equity, or any other false arrangement with any other domestic or foreign individual person, profit-seeking enterprise, or organization or institution which is established for educational, cultural, public welfare or charitable purposes, the tax collection authority for the purpose of computing the accurate amount of income and tax payable of the relevant taxpayers may, with the approval of the Ministry of Finance, make necessary adjustment according to the facts of actual transactions of investigation in accordance with the relevant laws.
The company, cooperative, or other juristic person who increase dividends or earnings distributed to shareholders, members, or investors through false arrangements or improper means that falsely increase the amount of tax credit set forth in Paragraph 4, Article 15, the tax collection authority may, based on the information acquired during investigation, make necessary adjustment in accordance with the amount of dividend or earnings payable to or received by such individual person.
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Article 15
From January 1, 2014, where a taxpayer, his(her) spouse and/or a dependent whose support deduction may be made in accordance with Article 17 of this Act has any incomes as provided in Paragraph 1 of Article 14, except the separated taxpayer and his(her) spouse who are approved to file their tax returns and calculate the tax payable separately in accordance with this Act, the taxpayer shall file their tax returns and calculate the tax payable jointly. After the taxpayer has been identified, a change may be made within six months from the time limit prescribed for filling income tax returns for the taxable year.
About the calculation of the tax payables as provided in the preceding Paragraph, the taxpayer shall choose one of the ways in the following Subparagraphs:
1. To calculate the tax payable on any categories of income jointly: The amount of tax leviable on any categories of income as provided in Paragraph 1 of Article 14 of a taxpayer, his(her) spouse and dependents may be computed jointly. In computing the amount of such tax, the exemption and deductions may be deducted from the incomes in accordance with Article 17.
2. To calculate the tax payable on the salary income separately, and to calculate the tax payable on the remaining categories of income jointly:
(1) The amount of tax leviable on the salary income of a taxpayer or his(her) spouse may be computed separately. In computing the amount of such tax, only the tax exempt amount and the special deduction of income from salary and wage as specified in Article 17 may be deducted from the salary/wage income of the person whose salary/wage income is computed separately.
(2) The amount of tax leviable on the remaining categories of income of a taxpayer, his(her) spouse and dependents, except the salary income as provided in the preceding Item, may be computed jointly. In computing the amount of such tax, the exemption and deductions, except as provided in the preceding Item, may be made from the remaining incomes in accordance with Article 17.
3. To calculate the tax payable on any categories of income separately:
(1) The amount of tax leviable on any categories of income as provided in Paragraph 1 of Article 14 of a taxpayer or his(her) spouse may be computed separately. In computing the amount of such tax, only the tax exempt amount, the special deduction of property transaction losses, the special deduction of income from salary and wage, the special deduction of savings and investment, and the special deduction of disability as specified in Article 17 may be deducted from the income of the person whose incomes are computed separately.
(2) The amount of tax leviable on the income as provided in Paragraph 1 of Article 14 of the person whose income is not computed separately and dependents may be computed jointly. In computing the amount of such tax, the exemption and deductions, except as provided in the preceding Item, may be deducted from the incomes in accordance with Article 17.
(3) In computing the amount of the special deduction of savings and investment in accordance with the preceding two Items, not to exceed the amount as provided in Subparagraph 2-(3)-(iii), Paragraph 1 of Article 17, shall be first applicable to the income of the person and his(her) dependents whose income is not computed separately. The balance of unused deduction, if any, may therefore be applicable to the relevant income of the person whose income is computed separately as provided in Item 1.
The standard of identifying the separated taxpayer and his or her spouse as provided in Paragraph 1 and related documents of evidence shall be issued by the Ministry of Finance.
From January 1, 2018, where a taxpayer, his(her) spouse, and dependents whose support deduction may be made in accordance with Article 17 of this Act receive Business Income as provided in Category 1, Paragraph 1 of Article 14, the gross amount of tax payable, computed in the annual consolidated income tax return for the current year in accordance with Paragraph 2, may be offset from the amount of tax credit, based on 8.5% of the total amount of the dividends and earnings distributed by a company, a cooperative, or other juristic person in the year 1998 or each ensuing year thereafter, with the credit ceiling set at NT$80,000 per year per income tax return.
The taxpayer will be able to opt to calculate the tax payable separately in accordance with the single tax rate of 28% on the total amount of the dividends and earnings in the tax return in the preceding Paragraph, and such tax payable shall be included in the consolidated income tax return filed by the taxpayer and excluded from the application of Paragraph 2 regarding tax calculation method and from the preceding Paragraph regarding tax credit.
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Article 17
The net consolidated income of an individual shall be the gross consolidated income as computed in accordance with Article 14 and the preceding two Articles less the following exemption and deductions:
1. Exemption: Taxpayers may deduct a prescribed amount of exemption for themselves, their spouses, and dependents that meet any of the conditions below. Furthermore, the exemption amount for taxpayers and spouses that are at least seventy years old shall be increased by 50%:
(1) Lineal ascendant(s) of the taxpayer and his (her) spouse having attained sixty years of age, or being incapable of earning a livelihood and being supported by the taxpayer. If a lineal ascendant being supported by the taxpayer has attained seventy years of age, the exemption amount for said lineal ascendant shall be increased by 50%.
(2) Children of the taxpayer who are under twenty years of age, or who, although having attained twenty years of age, are being supported by the taxpayer by reason of their studying in school, or having physical or mental disability, or being incapable of earning a livelihood.
(3) Brothers and sisters of the taxpayer and his(her) spouse who are under twenty years of age, or who, although having attained twenty years of age, are being supported by the taxpayer by reason of their studying in school, or having physical or mental disability, or being incapable of earning a livelihood.
(4) Other relatives or family members of the taxpayer within the meaning of Subparagraph 4, Article 1114, or Paragraph 3, Article 1123, of the Civil Code who are under twenty years of age, or who, although having attained twenty years of age, are actually being supported by the taxpayer by reason of their studying in school, or having physical or mental disability, or being incapable of earning a livelihood.
2. Deductions: A taxpayer may select either the "Standard Deduction" or "Itemized Deductions" and may, in addition thereto, declare special deductions:
(1) Standard Deduction: NT$120,000 for a single taxpayer; with a deduction to double that of the amount for a single taxpayer for a taxpayer and his or her spouse.
(2) Itemized Deductions:
i. Contributions and donations: For the taxpayer, his (her) spouse and dependent(s), contributions and donations made to educational, cultural, public welfare or charitable organizations or associations in a total amount not in excess of 20% of the total amount of the gross consolidated income is deductible. However, there is no limit to the amount of donations or contributions made for the support of national defense or troop-cheering or contributions to the government.
ii. Insurance premiums: Premiums paid by or for the taxpayer, his (her) spouse or lineal dependent(s) on life insurance, labor insurance , national pension insurance and insurance for military personnel, public servants or teachers, with the deductible amount not exceed NT$ 24,000 for each person per year. However, there is no limit to the amount of the premium paid for national health insurance.
iii. Medical and childbirth expenses: Medical and childbirth expenses incurred by the taxpayer, his (her) spouse, or dependent(s) provided that payments so made are limited to that paid to public hospitals, the hospitals or clinics appointed under national health insurance, or those hospitals having complete and accurate accounting records as recognized by the Ministry of Finance. However, no deduction shall be made for the portion (of such expense) covered by an insurance payment.
iv. Losses from disaster: The portion of loss incurred by the taxpayer, his (her) spouse or dependent(s) from a disaster caused by force majeure. However, no deduction shall be made for the portion of loss for which insurance benefit or relief has been received.
v. Interest on a house mortgage: The interest payable on a loan from a financial institution by a taxpayer, his (her) spouse and dependent(s) for the purpose of a house for his (her) own use may be deducted from his (her) consolidated income, with the deductible amount not to exceed NT$ 300,000 per year per tax return. However, if a special deduction for savings and investment has been made in the same tax return, the amount of such special deduction shall be subtracted from the aforesaid interest of the house mortgage; the deduction for interest on the house mortgage in accordance with the above mentioned provisions is limited to one house only.
vi. Rent for Housing: Rent for housing in the R.O.C. paid by taxpayers, their spouses, and lineal dependent(s) and used as their own residence rather than for business or performing professional services, may be deducted from their consolidated income to the extent of NT$ 120,000 per year per tax return. However, no deduction shall be made for taxpayers who have filed "Interest on a House Mortgage" on the same tax return.
(3) Special Deductions:
i. Loss from property transactions: The amount of loss from property transactions incurred by a taxpayer, his (her) spouse and dependent(s) which is deductible in one year shall not exceed the declared amount of income derived from property transactions in the same year. However, if no income or no sufficient income derived from property transactions in the same year is available for deduction, the loss may be carried forward in the next three years. The provisions relating to computation of income derived from property transactions set forth in category 7, Paragraph 1, Article 14 of the Act shall apply mutatis mutandis to the computation of loss from property transactions.
ii. Special deduction of income from salaries/wages: For a taxpayer, his (her) spouse and dependent(s) having income from salaries/wages, the deductible amount not to exceed NT$200,000 per year may be deducted for each person.
iii. Special deduction for savings and investment: For a taxpayer, his(her)spouse and dependent(s) having Interest derived from deposits in financial institutions, income from trust funds in the nature of savings, and dividends accrued on registered share certificates publicly issued and listed on the market by a company , the deductible amount should not exceed NT$270,000 per year per tax return. However, this limit of deduction does not apply to the interest accrued and exempt from income tax on postal pass-book savings under the provisions of the Post Savings and Remittances Act and the interest accrued on short-term commercial papers subject to separate taxation as stipulated in this Act.
iv. Special deduction for the disabled: If the taxpayer , his (her) spouse or dependent(s) has (have) a disability certificate(s) or identification or being a patient as defined in Subparagraph 4, Article 3 of The Mental Health Act, a deduction of NT$200,000 per year may be made for each person.
v. Special deduction for educational tuition: If any of the children of a taxpayer is studying in a college or university, a deduction of NT$ 25,000 per child per year may be made for his (her) educational tuition. However, the tuition of the Open University, vocational colleges, the first three years of five-year vocational colleges and students who have accepted government subsidies are excluded.
vi. Special deduction for pre-school children: Starting from 2012, for a taxpayer who has children under or equal to five years of age and his or her circumstances do not fall under any of following two conditions, the amount of deduction for pre-school children is NT$120,000 per child per year:
(i) The taxpayer’s annual total net consolidated income after the amount of the aforesaid deduction has been deducted is declared greater than or equal to the 20% individual income tax rate, or his or her individual income tax is declared in accordance with Paragraph 2 of Article 15 of the Act such that the declared individual income tax rate is greater than or equal to 20%.
(ii) The amount of basic income of the taxpayer calculated in accordance with Article 12 of the Income Basic Tax Act is greater than the amount of deduction described in Article 13 of the Income Basic Tax Act.
The provisions of the deductions set forth in Item 2, Subparagraph 2 of the preceding Paragraph of this Article shall not apply to a taxpayer who is subject to filing a final income tax return in accordance with Article 71 of this Act but fails to do so and is assessed by the tax collection authority as to his (her) tax liabilities.
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Article 24
The amount of income of a profit-seeking enterprise shall be the net income, i.e., the gross yearly income after deduction of all costs, expenses, losses and taxes. When calculating the amount of income in which there are taxable and exempt incomes involved, the costs, expenses or losses, except that those which are attributable to such respective income in a direct, reasonable and definite way, which may be attributed to thereby and recognized as its deductions respectively, shall be reasonably allocated to the respective income. Measures regarding such allocation shall be prescribed by the Ministry of Finance.
The unpaid accounts or expenses or losses or various debts payable recorded in a profit-seeking enterprise’s accounts that have yet to have been paid at the time of the expiry of the period for the validing of such claims according to the relevant regulations shall be enumerated under other revenue headings, and shall be enumerated under the accounts of non-operating expenditure at the time of actual payment.
Income derived from interest of short-term commercial papers by a profit-seeking enterprise in accordance with Category 4, of Paragraph 1 of Article 14 shall not be added to the amount of income of the profit-seeking enterprise, but withheld in accordance with the provisions of Article 88. However, where the issuing date of short-term commercial papers held by a profit-seeking enterprise is a day on or after January 1, 2010, the interest income of such short-term commercial papers shall be added to the amount of income of the profit-seeking enterprise.
From January 1, 2010, interest distributed from beneficiary securities or asset-backed securities issued in accordance with the Financial Asset Securitization Act or the Real Estate Securitization Act by a profit-seeking enterprise shall be added to the amount of income of the profit-seeking enterprise, and excluded from the application of the provisions of Paragraph 2, Article 41 of the Financial Asset Securitization Act and Paragraph 3, Article 50 of the Real Estate Securitization Act regarding separate taxation.
The Dividends or earnings received by a profit-seeking enterprise having its head office outside the territory of the Republic of China shall not be added to the amount of income of the profit-seeking enterprise, but withheld in accordance with the provisions of Article 88.
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Article 42
The dividends or earnings received by a profit-seeking enterprise organized as a company, a cooperative, or other juristic person from its investment in another domestic profit-seeking enterprise shall not be included in its taxable income.
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Article 66-9
From 1998 to 2017, if there is any earnings of the current year not distributed by a profit-seeking enterprise, an additional profit-seeking income tax shall be levied at the rate of ten percent on such undistributed surplus earnings. Beginning from the year 2018, the aforesaid tax shall be levied at the rate of five percent.
The term "undistributed earnings" as referred to in the preceding Paragraph shall denote the total amount of after-tax net income for the period and other profit items adjusted to the current year’s undistributed earnings other than after-tax net income for the period as calculated by a profit-seeking enterprise in accordance with the Business Entity Accounting Act, Securities and Exchange Act, or other laws used in preparing financial reports, less the following sums:
1. Make-up of the losses in previous years and the next-year-loss which has been duly audited and certified by a certificated public accountant;
2. The dividends or earnings which have been distributed from the earnings gained in the current year;
3. Legal earned surplus reserve having been set aside from the surplus earnings of the current year in accordance with the Company Act or other acts, the legal reserve and the public interest reserve having been set aside in accordance with the Cooperative Act;
4. Sinking fund reserve or restricted distributable surplus earnings which were required to be set aside or restricted from distribution under any treaty signed by the nation with another country, or under any agreement signed in accordance with the economic assistance or loan agreement signed by the nation with any international organization;
5. Special reserve or restricted distributable surplus earnings which were required to be set aside or restricted from distribution of the surplus earnings of the current year pursuant to the order given by the competent authority in accordance with the provisions of other laws;
6. Capital reserve which was required to be transformed from income after tax pursuant to the provisions of other laws;
7. The amount of other loss items adjusted to the current year’s undistributed earnings other than after-tax net income for the period; and
8. Other accounts as approved by the Ministry of Finance.
The amount of the accounts specifies in Subparagraphs 2 through 6 of the preceding Paragraph shall be limited to those actually occurred prior to the end of the fiscal year following the year in which the respective incomes are taxable.
The term "after-tax net income for the period" and "the amount of other profit (or loss) items adjusted to the current year’s undistributed earnings other than after-tax net income for the period" referred in Paragraph 2 of this Article, in the case where the financial statements in the current year of a profit-seeking enterprise were duly audited and certified by a certified public accountant, shall be based on the amount which was assessed by such certified public accountant. However, if thereafter the authority in charge conducts an assessment of such financial statements and makes an adjustment to the aforesaid items, the original amount shall be replaced by the amount after such adjustment of which the authority in charge has informed the enterprise.
If the reasons why distributable surplus earnings were restricted from distribution pursuant to the provisions of Subparagraphs 4 and 5 of Paragraph 2 of this Article are no longer pertaining, the part of which the distributable surplus earnings therefrom have been undistributed prior to the end of the fiscal year following the year when the reasons no longer pertain shall be added to the surplus earnings of the year when the reasons no longer pertain and be subject to the levy of an additional profit-seeking income tax at the rate provided by the provisions of Paragraph 1 of this Article.
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Article 71
A taxpayer shall, within the period from May 1 to May 31 of each year, fill out and file to the tax collection authority-in-charge an annual income tax return declaring therein the items an amounts that make up his gross consolidated income (for an individual ) or the gross profit-seeking income (for a profit-seeking enterprise) for the preceding year together with the tax deductions/exemptions, and/or offsets associated therewith, if any. The taxpayer shall further calculate the amount of income tax actually payable by him / her or it by deducting the provisional income tax payment, the unused withholding tax and the amount of tax credit as specified in the provisions of Paragraph 4, Article 15 from the amount of the income tax payable for the whole year, and shall make payment voluntarily before filing the annual income tax return. However, the withholding tax from the income subject to separate taxation in accordance with the Act shall not be deductible.
A profit-seeking enterprise organized as a sole proprietorship or a partnership shall declare an annual income tax return as per the preceding Paragraph and be exempt from computing and making a tax payment before filing its income tax return; the amount of income of a profit-seeking enterprise shall be included in “Business Income” as defined in Category 1, Paragraph 1 of Article 14, and the consolidated income tax shall be levied in accordance with this Act. However, a sole proprietorship or a partnership recognized as a small-scale profit-seeking enterprise shall not file an annual income tax return; the amount of the profit-seeking enterprise income assessed by the collection authority shall be included in “Business Income” and the consolidated income tax shall be levied in accordance with this Act.
Filing of an annual income tax return shall be exempt for an individual residing in the territory of the Republic of China whose annual gross consolidated income does not exceed the sum of the amount of exemption plus the standard deduction for the current year provided, however, that if an application has been filed for refund of the tax withheld and the tax credit as specified in the provision of Paragraph 4, Article 15, or subject to separated taxation as stipulated in the provision of Paragraph 4, Article 15, the said taxpayer shall still be required to file the annual income tax return.
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Article 75
A profit-seeking enterprise shall make its current final report up to the date of dissolution, closure, amalgamation or ownership transfer, and then its total business income and taxable amount on a prescribed form to the tax collection authority-in-charge within forty-five days, and further make payment voluntarily before filing the income tax return.
Any income earned from liquidation during the period of liquidation shall be reported on a prescribed form to the tax collection authority-in-charge within thirty days from the date of completion of liquidation, and the taxpayer shall, before filing his tax return, make payment voluntarily at the prescribed rates applicable to the profit-seeking enterprise in the taxable year. But this is not applicable to those enterprises which are exempt from the liquidation process in accordance with other acts.
The term "period of liquidation" as referred to in the preceding Paragraph for the company organization shall be the time limit in accordance with the Company Act; for the limited partnership organization shall be the time limit in accordance with the Limited Partnership Act; and for others shall be three months from the date of dissolution, closure, amalgamation, or ownership transfer.
A profit-seeking enterprise organized as a sole proprietorship or a partnership shall make its current final report or liquidation income report in accordance with Paragraphs 1 and 2 and be exempt from computing and making a tax payment before filing its income tax return. The amount of income of a profit-seeking enterprise shall be included in “Business Income” as defined in Category 1, Paragraph 1 of Article 14, and the consolidated income tax shall be levied in accordance with this Act. However, a sole proprietorship or a partnership recognized as a small-scale profit-seeking enterprise need not make its current final report or liquidation income report. The collection authority shall assess the amount of profit-seeking enterprise income and incorporate the income into its sole proprietor’s or partners’ consolidated income and levy consolidated income tax in accordance with this Act.
In the case of failure to submit a current final report or liquidation income report within the time limit as provided in Paragraphs 1 and 2, the collection authority shall assess and determine the amount of business income and tax payable; if a profit-seeking enterprise is organized as a sole proprietorship or a partnership, the collection authority shall assess its taxable income, and incorporate the income into its sole proprietor’s or partners’ consolidated income and levy consolidated income tax in accordance with this Act.
In the event of bankruptcy, a profit-seeking enterprise shall, within ten days prior to the time limit prescribed for credit filing announced by the court, file its current business income tax return with the tax collection authority-in-charge. In the case of failure in filing tax return within the time limit, the collection authority shall assess and determine its amount of business income and taxable amount immediately according to the finding made by itself.
The court shall, at the same time of announcement of credit filing, notify the local collection authority of the bankruptcy declared on that profit-seeking enterprise.
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Article 76
A taxpayer shall attach to his annual income tax return, receipts for taxes paid voluntarily, and other related documents of evidences and, in the case of a profit-seeking enterprise, also the balance sheet, inventory of properties and profit and loss statement.
At the time of filing an income tax return by a company, cooperative, or other juristic person, its responsible person shall submit a statement listing the names and residences of shareholders, members, or investors and the amount of dividends or earnings payable or paid. In the case of partnership, its responsible person shall submit a statement listing the names and residences of partners and their respective percentages of investment and profit or loss allocation.
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Article 79
Where a taxpayer fails to file an annual income tax return within the prescribed period the collection authority shall serve a delinquent notice, requesting the taxpayer to complete annual income tax return within fifteen days from the date of receipt of the notice. In the event of failure in filing the annual income tax return after expiration of the prescribed period, the collection authority shall make provisional assessment of the amount of income and tax payable on the basis of available taxation data or the profit standard of the same trade and serve the taxpayer the assessment notices along with a tax demand notice. In case other taxation information is afterwards found out by the collection authority, the case shall be handled in accordance with the relevant provisions of the Tax Collection Act. Where a profit-seeking enterprise is organized as a sole proprietorship or a partnership, the collection authority shall assess its taxable income and incorporate the income into its sole proprietor’s or partners’ consolidated income and levy consolidated income tax in accordance with this Act.
The provisions of the preceding Paragraph shall not apply to a taxpayer subject to consolidated income tax. In the event of failure on the part of such a taxpayer in filing annual income tax return after expiration of the prescribed period, the collection authority shall forthwith determine the amount of income and tax payable based on the available taxation data or the profit standard of the same trade and notify the taxpayer of making tax payment within the time limit. In case any additional taxation data one afterwards discovered upon investigation by the collection authority, the case shall be still dealt with in accordance with the relevant provisions of the Tax Collection Act.
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Article 88
For a taxpayer having any income of the following categories, the tax withholder involved shall withhold tax payable at the time of payment as per the prescribed tax rates and withholding procedures, and pay the tax withheld in accordance with the provisions of Article 92 of this Act:
1. The dividends distributed by a company to an individual not residing in the territory of the Republic of China or a profit-seeking enterprise having its head office outside the territory of the Republic of China; or the surplus profits distributed by a cooperative, other juristic person, partnership, or a wholly-owned organization to its member, investor, partner, or sole investor not residing in the territory of the Republic of China;
2. Salary, interest, rental, commission, royalty, cash award or prize given in a contest or game competition, prizes of a chance winning, retirement pay, severance pay, separation pay, resignation pay, life-time pension, old-age pension not covered by insurance benefits, reward for information or accusation, income from transactions in structured products, and fees for professional practices paid by any organization, institution, school, enterprise, bankruptcy estate, or practitioner of profession, and the income paid to a foreign profit-seeking enterprise having no fixed place of business or business agent within the territory of the Republic of China;
3. Profit-seeking enterprise income derived from operations by a profit-seeking enterprise as provided in Article 25 having its income tax withheld by a business agent or the payer in accordance with the provision of Article 98-1; or
4. Profit-seeking enterprise income derived from business in the Republic of China by a foreign motion picture enterprise which has no branch office in the territory of the Republic of China as provided in Article 26 of this Act.
Where a profit-seeking enterprise organized as a sole proprietorship or a partnership files its annual income tax return according to the provision of Paragraph 2 of Article 71 or its current final report on total business income or income earned from liquidation according to the provision of Paragraph 4 of Article 75, the income tax payable on the surplus profits payable by a sole proprietorship or a partnership to its sole proprietor or partners not residing in the territory of the Republic of China shall be withheld in accordance with prescribed withholding rates by the tax withholder and pay the tax withheld in accordance with the provisions of Article 92 of this Act; and thereafter, Subparagraph 1 in the preceding paragraph of this Article shall not apply when the surplus profits are actually distributed to the sole proprietor or partners of the aforesaid profit-seeking enterprise.
Where a profit-seeking enterprise organized as a sole proprietorship or a partnership in accordance with the preceding Paragraph files the annual income tax return, makes its current final report on total business income or income earned from liquidation in accordance with this Act, requests corrections of the above filing of annual income or final report, or fails to file annual income or make a current final report, and the tax collection authority assesses and determines more business income that will increase the surplus profit of a sole proprietor or a partner of the profit-seeking enterprise, the tax withholder shall withhold the tax payable and pay the tax withheld on the above increased amount of the surplus that should be attributed to the sole proprietors or partners not residing in the territory of the Republic of China in accordance with Article 92 of this Act within 30 days from receipt of the notice of tax assessment.
The withholding rates and withholding procedures applicable to the various kinds of income as prescribed in the preceding three Paragraphs of this Article shall be drafted and established by the Ministry of Finance and submitted to the Executive Yuan for approval.
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Article 89
For tax to be levied on different categories of income as set forth in the preceding Article, the tax withholders and taxpayers are designated as follows;
1. For the dividends distributed by a company to an individual person not residing in the territory of the Republic of China and a profit-seeking enterprise having its head office outside the territory of the Republic of China; or the surplus profits distributed by a cooperative to its members not residing in the territory of the Republic of China; or the earnings distributed by other juristic person to its investors not residing in the territory of the Republic of China; or the surplus profits distributed or payable by a profit-seeking enterprise organized as a sole proprietorship or a partnership to its sole proprietor or partners not residing in the territory of the Republic of China, the tax withholder shall be the person in-charge of the said company, cooperative, other juristic person, sole proprietorship, or partnership; while the taxpayer(s) shall be the said individual shareholder not residing in the territory of the Republic of China, or the profit-seeking enterprise shareholder having its head office outside the territory of the Republic of China, or the member, investor, partner of a partnership, or the sole proprietor not residing in the territory of the Republic of China;
2. For the income from salary, interest, rental, commission, royalty, fee for professional practices, cash award or prize given in any contest or game or won by chance, retirement pay, severance pay, separation pay, resignation pay, life-time pension, old-age pension not covered by insurance benefits, reward for information or accusation, income from transactions in structured products, and the income payable to a foreign profit-seeking enterprise having no fixed place of business or business agent within the territory of the Republic of China the tax withholders shall be the head of the unit responsible for tax withholding in charge of the relevant organizations or institutions, schools, the responsible persons of enterprises, the trustees of bankrupt estates and the practitioners of professions, as the case may be, while, the taxpayers shall be the recipients of such income;
3. The withholder of profit-seeking enterprise income tax on income as provided in Subparagraph 3, Paragraph 1 of the preceding Article shall be the business agent or the payer of such income, while the taxpayer shall be the profit-seeking enterprise having its head office outside the territory of the Republic of China;
4. The withholder of profit-seeking enterprise income tax on income receivable by a foreign motion picture enterprise shall be the business agent thereof or the payer of such income, while the taxpayer shall be the foreign motion picture enterprise.
Where a withholder fails to fulfill his obligation of making tax withholding, and where demanding has become impossible by reason that the where abouts of the withholder is unknown or for other causes, the collection authority may collect the tax directly from the taxpayers concerned.
For a payment made in each year by an organization, institution, school, enterprise, bankrupt estate, or professional practitioner of any income which is subject to tax withholding under the provisions of the preceding Article, and a payment of any other income as prescribed under Category 10, Paragraph 1 of Article 14, if the tax is not withheld because the amount paid does not reach the minimum amount of income subject to tax withholding, or any payment which does not come under the categories subject to tax withholding stipulated in this Act, a list containing detailed information of the name, address, and National Identification Card number of the recipients of such payments, as well as the total amount paid during the year shall be prepared in accordance with the prescribed form and submitted to the tax collection authority-in-charge before or on the last day of January of each year. In addition, a withholding exemption certificate shall be prepared and issued to taxpayers concerned before or on February 10 of each year. In the case that three national holidays occur in immediate succession in January, the period for the submission of the withholding exemption certificates shall be extended to February 5 and the period of the issuance of the certificates to taxpayers concerned shall be extended to February 15.
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Article 89-1
With regard to the revenue arising from the trust property referred to in Article 3-4 hereof, the tax withholder concerned shall, at the time of payment thereof, name the trustee of the said trust deed as the tax payer for that payment and shall completing the tax withholding process in accordance with the provisions of the preceding two Articles. However, for the trust benefits, except for the income subject to separate taxation in accordance with the Act, payable by the tax withholder in respect of a public trust set forth in Paragraph 5, Article 3-4 hereof, such payments shall be exempt from the assessment of withholding tax which is otherwise payable under the provisions of Article 88 hereof.
When issuing a withholding certificate in accordance with the provisions of Article 92-1 hereof, the trustee of a trust deed shall take the amount of tax withheld from each category of the trust benefits paid to a trust beneficiary as the amount of income tax withheld for the said trust beneficiary provided, however, that if there are two or more trust beneficiaries, the trustee shall calculate the withholding tax paid be each trust beneficiary in accordance with the proportion to be determined under Paragraph 2, Article 3-4 hereof.
Where the trust beneficiary is an individual who is not residing in the territory of the Republic of China or a profit-seeking enterprise which does not have a fixed business place in the territory of the Republic of China, the trustee of the said trust deed shall be regarded as the tax withholder, and shall, in accordance with the provisions of Article 88 hereof, withhold the income tax from various income payments payable to said trust beneficiary as calculated under the provisions of Paragraphs 1 and 2, Article 3-4 hereof provided, however, that the withholding tax already paid up by the trust beneficiary/beneficiaries as set forth in the preceding Paragraph may be deductible from the withholding tax payable by such trust beneficiary/beneficiaries under this paragraph.
Where the trust beneficiary is a profit-seeking enterprise having its head office outside the territory of the Republic of China but having a fixed business place within the territory of the Republic of China, the provision in the preceding paragraph shall apply mutatis mutandis to the dividends or earnings among its trust benefits.
When making distribution of trust benefits in respect of a public trust or a trust fund as set forth in Paragraphs 5 and 6, Article 3-4 hereof, the trustee thereof shall be considered as the tax withholder who shall complete the withholding process in accordance with the provisions of the preceding two Articles.
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Article 92
The tax withholders of various kinds of income as provided in Article 88 shall, within the first ten days of each month, effect payment to the national treasury of all the taxes withheld in the previous month, and shall, before or on the last day of January of each year, make out withholding certificates and submit them to the tax collection authority-in-charge for verifying the amounts of tax withholdings from the taxpayers in the preceding year, and shall issue a receipt of the withholding certificate to each of the taxpayers before or on February 10 of each year. In the case that three national holidays occur in immediate succession in January, the period for the submission of the withholding certificates shall be extended to February 5 and the period of the issuance of the certificates to taxpayers concerned shall be extended to February 15. However, in the case of dissolution, closure, merger or transfer of ownership of a profit-seeking enterprise, or deactivation or change of an agency or organization, the tax withholder concerned shall immediately make out withholding certificates for the amount withheld and submit them to the tax collection authority-in-charge within ten days thereafter.
In the case of a non-resident individual or a profit-seeking enterprise without a fixed place of business in the Republic of China but having income as enumerated under Article 88, the tax withholder, shall within ten days from the date of withholding, effect payment to the national treasury of all the taxes withheld, make out withholding certificates and issue them to the taxpayer after submitting them to the tax collection authority-in-charge for verification.
In the case of dividends or earnings received by a profit-seeking enterprise having its head office outside the territory of the Republic of China but having a fixed place of business within the territory of the Republic of China, the provision in the preceding Paragraph shall apply mutatis mutandis.
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Article 100
The tax collection authority shall, after having determined the annual income of a taxpayer, make out and serve on him or her a tax demand notice giving the balance of the tax payable for the full taxing year after deducting the provisional payment, the tax withheld yet to be offset, the amount of credit tax as specified in the provisions of Paragraph 4, Article 15 , and the voluntary payment of tax made provided, however, that the withholding tax from the income subject to separate taxation in accordance with the Act shall not be deductible.
In case the tax as determined payable for annual settlement falls short of the total amount of tax paid, the collection authority shall make out and issue to the taxpayer a refund notice or an exchequer’s check for refunding the overpaid amount of income tax.
If, thereafter any tax is decided upon as additionally payable or refundable pursuant to reinvestigation result, or a decision made on an administrative appeal or an administrative proceeding, the tax collection authority shall make out and serve to the taxpayer a tax demand notice, or a revenue refund notice, or an exchequer’s check for refunding underpaid tax and for demanding the full payment of the tax payable. The taxpayer shall, within 10 days after service of the foregoing tax demand notice, make the full payment of the income tax payable by him/it.
In the case of refund as provided in the preceding two Paragraphs, the tax collection authority shall, promptly and no later than ten days from the date of verification, fill out and serve to the taxpayer an over-paid tax refund notice or an exchequer’s check. The period for refund of overpaid tax shall be three months commencing from the date of service of the over-paid tax refund notice to the taxpayer. Upon expiration of the said refunding period, no refund will be made.
Where the amount of retained surplus profits declared by a taxpayer under the provisions of Article 102-2 hereof is verified as being under-declared or overdeclared, the supplemental payment of the shortfall tax or the refund of the overpaid tax shall be governed by the provisions set out in Paragraphs One through Four of this Article.
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Article 102-1
A profit-seeking enterprise shall, before or on the last day of January of each year, fill out the dividend statement on a prescribed form and submit the data of dividends or earnings in the year 1998 or each ensuing year thereafter distributed to shareholders, members, or investors for the whole year of the preceding year to the tax collection authority-in-charge for verification; and shall further issue the dividend statements to all taxpayers before or on February 10 of each year. In the case that three national holidays occur in immediate succession in January, the period for the submission of the aforementioned data shall be extended to February 5 and the period of the issuance of the dividend statements to taxpayers concerned shall be extended to February 15. However, if the profit-seeking enterprise enters into the process of dissolution or merger, it shall forthwith fill out the dividend statements in respect of the dividends or surplus earnings which have been distributed, and shall submit them to the tax collection authority-in-charge within 10 days.
The profit-seeking enterprise referred to in the preceding Paragraph shall, when filing its tax return of the year 2017 and previous years, prepare, in a prescribed format, a statement of changes occurred in the said taxable year in the shareholder imputation credit account and file the said statement along with the filled out tax return form with the tax collection authority-in-charge for its auditing and verification. However, it shall file the tax return upon the completion date of the liquidation process, if it enters into the process of dissolution; or on the effective date of merger, if it enters into the process of merger. The statement of changes in the shareholder imputation credit accounts referred to in the preceding Paragraph shall mean the amount of beginning balance, the amount of increases and decreases in the then current year, and the current balance in the said account.
Under Paragraph 1, a profit-seeking enterprises, shall issue dividend statements and has reported such issuance to the tax collection authority-in-charge within the deadline, shall be exempt from issuing the dividend statements to the taxpayers if the statements meet the following conditions:
1. The taxpayer is an individual residing in the territory of the Republic of China, a profit-seeking enterprise having permanent establishment in the territory of the Republic of China, organization, institution, professional practitioner, or trustee of a trust deed.
2. The data of dividends or earnings has been included in the contents of income provided for the taxpayers by the tax collection authorities during the period for the filing of the income tax return.
3. Other situations prescribed by the MOF.
Those who are exempt from preparing and issuing the vouchers to taxpayers according to the provision of the preceding paragraph, shall still prepare and issue the vouchers to taxpayers upon their request.
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Article 106
Under any of the following circumstances, the local collection authority-in-charge shall, in addition to requiring submission of report or amendment of report entries within a specified time period, impose upon the violator a fine of not exceeding NT$1,500:
1. Where the responsible person of a profit-seeking enterprise organized as a company, a cooperative, or other juristic person fails, in violation of the provisions of Article 76, to report within the prescribed time period the dividends or profits payable or paid to shareholders, members, or investors;
2. Where the responsible person of a partnership fails, in violation of the provisions of Article 76, to report the names and residences of partners, the amount of their respective investments and the percentage of allocation of profit or loss in a detailed list;
3. Where the responsible person of a profit-seeking enterprise fails to record the necessary information in the account books required by the provisions of Article 90;
4. Where the responsible person of a warehouse or godown fails to report the necessary information as required by the provisions of the Paragraph 1 of Article 91.
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Article 108
Where a taxpayer failed to file annual income tax return within the period as specified in the provisions of Article 71 but has subsequently filed it in accordance with the provisions of Paragraph 1 of Article 79, the collection authority shall, after determining the amount of its income and the amount of tax payable through investigation, levy a delinquent reporting surcharge in an amount equal to ten percent of the tax determined as payable; where a profit-seeking enterprise is organized as a sole proprietorship or a partnership, such enterprise shall be levied a delinquent reporting surcharge in an amount equal to ten percent of the amount calculated at the profit-seeking enterprise income tax rate applicable in the current year on the assessed income. The amount of delinquent reporting surcharge shall not exceed NT$30,000 but shall not be less than NT$1,500.
Where a taxpayer further fails to file an annual income tax return within the time limit as prescribed in Article 79, and the amount of taxable income and the amount of tax payable have been determined by the collection authority based on the available data or the profit standard of the same trade, the collection authority shall levy a delinquent reporting surcharge in an amount equal to twenty percent of the tax determined as payable; where a profit-seeking enterprise organized as a sole proprietorship or a partnership shall be levied a delinquent reporting surcharge in an amount equal to twenty percent of the amount calculated at the profit-seeking enterprise income tax rate applicable in the current year on the assessed income. The amount of delinquent reporting surcharge shall not exceed NT$90,000 but shall not be less than NT$4,500.
The provisions of Paragraphs 1 and 2 shall not apply to taxpayers who are subject to consolidated income tax and those who are exempt from filing annual income tax returns according to Article 71 of this Act.
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Article 110
In the case of a taxpayer who has filed an annual income tax return, current final report on total business income or income earned from liquidation in accordance with the provisions of this Act, any omission or under-reporting of income taxable hereunder shall be subject to a fine of no more than twice the amount of the tax evaded.
In the case of a taxpayer who fails to file an annual income tax return, current final report on total business income or income earned from liquidation in accordance with the provisions of this Act and who is found by the collection authority to have income taxable hereunder, the collection authority shall, in addition to determining the tax payable in accordance with act, impose a fine of no more than three times the amount of tax determined as payable.
Where a profit-seeking enterprise, due to tax exemption provided under the incentive statute or because of business deficit, shall not have a taxable income even though the amount of income omitted or under-reported is added to it, a fine shall be imposed separately at prescribed times according to the preceding two paragraphs on the taxable omission and under-reporting of income calculated at the profit-seeking enterprise income tax rate applicable in the current year. The amount of the fine, however, shall not exceed NT$ 90,000 or be less than NT$ 4,500.
Where a profit-seeking enterprise is organized as a sole proprietorship or a partnership in accordance with Paragraphs 1 and 2 and there is any omission or under-reporting of taxable income hereunder, such enterprises shall be imposed a multiplier fine, respectively, according to Paragraphs 1 and 2 on the amount on the basis of assessed short-declared or under-declared income calculated at the profit-seeking enterprise income tax rate applicable in the current year.
In the case of a taxpayer who is subject to consolidated income tax complies with any one of the following conditions that falsely increases the amount of tax credit set forth in Paragraph 4, Article 15 shall be imposed a fine of no more than one fold of the amount of the tax evaded or over-refunded.
1.A taxpayer who fails to calculate the amount of tax credit based on the tax credit rate or the amount of the credit ceiling as specified in the provision of Paragraph 4, Article 15.
2.A taxpayer who fails to calculate the amount of tax credit based on the amount of dividends or earnings received.
3.A taxpayer who receives neither any dividends nor earnings and makes a false declaration of tax credit.
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Article 114-1
Before December 31, 2017, where a profit-seeking enterprise fails to set up a shareholder tax offsetting account which should be set up or update the records in such account as required in accordance with the provisions of Articles 66-1 to 66-4 of this Act in force of its commission, it shall be imposed with a fine in the amount of not less than NT$3,000 but not more than NT$7,500 and shall be ordered, by a notice, to set up that account or to update the records in that account within one-month accordingly. If the profit-seeking enterprise again fails to set up or to update the shareholder tax offsetting account after expiry of the one-month time limit, it shall be imposed with a fine in the amount of not less than NT$7,500 but not more than NT$15,000 and shall be ordered, by a notice, to set up or to update such an account accordingly. Any further failure of the profit-seeking enterprise to set up or to update the shareholder tax offsetting account shall be subject to the same punishment successively on each violation basis until the said account has been set up and is regularly updated in accordance with this Act.
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Article 114-2
Before December 31, 2017, under any of the following circumstances, the act violating profit-seeking enterprise shall be ordered to pay up the income tax which shall otherwise be offset in respect of the amount of over-distributed surplus earnings, and shall be imposed a fine in an amount no more than one fold of the said amount of over-distributed surplus earnings:
1. The profit-seeking enterprise has violated the provisions of Paragraph 2, Article 66-2, Article 66-3, or Article 66-4 of this Act in force of its commission by falsely increasing the amount in the shareholder tax offsetting account, or short-declaring the amount of balance in the account of booked cumulating of retained surplus earnings set forth in Article 66-6 hereof in force of its commission, to the extent that the amount of deductible tax actually allocated to shareholders or members has exceeded the amount of deductible tax which may be allocated to shareholders.
2. The profit-seeking enterprise has violated the provisions of Paragraph 1, Article 66-5 hereof in force of its commission because the amount of deductible tax allocated by it to its shareholders or members has exceeded the amount of balance in its shareholder tax offsetting account as booked as of the date of distribution of dividends or other surplus earnings.
3. The profit-seeking enterprise has violated the provisions of Article 66-6 hereof in force of its commission when distributing the net dividend by using a tax deduction ratio which is higher than the designated ratio for such purpose, whereby the amount of deductible tax actually allocated to its shareholders has exceeded the amount of deductible tax to be calculated in accordance with this Act.
Before December 31, 2017, where a profit-seeking enterprise has violated the provisions of Article 66-7 hereof in force of its commission by allocating the amount of deductible tax to its shareholders or members for them to offset the income tax payable by them, the said profit-seeking enterprise shall be ordered to pay, within a given time limit, the amount of deductible tax so allocated by it, and shall be imposed with a fine in an amount no more than one fold of the amount allocated.
In case the profit-seeking enterprise set forth in the preceding two Paragraphs has wound up, closed down or moved to an unknown place, the competent tax collection authority shall collect from the shareholders or members of the said enterprise the amount of deductible tax which was over-allocated or unlawfully allocated by the said enterprise to its shareholders or members.
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Article 114-3
Before January 31, 2017, a profit-seeking enterprise which distributed dividends or earnings in the year 1998 or each ensuing year thereafter to shareholders, members, or investors and failed to enter correct data in or to issue the dividend statements on a prescribed form by the deadline as fixed in Paragraph 1, Article 102-1 hereof shall be ordered to correct the entries of or to issue the dividend statements, and shall further be imposed with a fine in an amount equal to 20% of the total amount of deductible tax indicated in the dividend statements provided that the amount of the fine shall not exceed NT$30,000, nor may it be less than NT$1,500, but may be reduced by one half if the said enterprise takes initiative to declare the dividends or to issue the dividend statements after expiry of the foregoing deadline. In case the profit-seeking enterprise further fails to declare correct dividends or to issue the dividend statements within a given time limit after having been ordered to do so, it shall be subject to a fine of no more than three times the total amount of deductible tax provided that the amount of such fine shall not exceed NT$60,000 or be less than NT$3,000.
After January 1, 2018, a profit-seeking enterprise which distributed dividends or earnings in the year 1998 or each ensuing year thereafter to shareholders, members, or investors and failed to enter correct data or to issue the dividend statements on a prescribed form by the deadline as fixed in Paragraph 1, Article 102-1 hereof shall be ordered to correct the entries of or to issue the dividend statements, and shall further be imposed with a fine in an amount equal to 2% of the total amount of the dividends on the earnings indicated in the dividend statements provided that the amount of the fine shall not exceed NT$30,000, or be less than NT$1,500, but may be reduced by one half if the said enterprise takes the initiative to declare the dividend or to issue the dividend statements after expiry of the foregoing deadline. In case the profit-seeking enterprise further fails to declare correct dividends or to issue the dividend statements within a given time limit after having been ordered to do so, it shall be subject to a fine of no more than 20% of the total amount of the dividends or earnings provided that the amount of such fine shall not exceed NT$60,000 or be less than NT$3,000.
A profit-seeking enterprise which has violated the provisions of Paragraph 2, Article 102-1 hereof by failing to file timely or accurate statement of changes in shareholder tax offsetting account shall be imposed with a fine of NT$7,500 and shall be ordered, by a notice, to file such statement within a given time limit. If the said profit-seeking enterprise further fails to do so after expiry of the deadline, the fine shall be imposed on the basis of each violation until the time of its filing of the statement required.
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Article 126
This Act shall come into force from the date of its original promulgation provided with the condition, however, that the text of Article 17 amended and promulgated on December 28, 2005 shall come into force retroactively on January 1, 2005; the text in Category 9, Paragraph 1 of Article 14, amended and promulgated on January 2, 2008 shall come into force on January 1, 2008; and the text of Article 17 amended and promulgated on December 26, 2008 shall come into force retroactively on January 1, 2008. The text in Paragraph 2 of Article 5 amended and promulgated on May 27, 2009 and the text in Paragraph 5 of the same Article amended on and promulgated June 15, 2010 shall come into force in fiscal year 2010. The text in Subparagraphs 1 and 2, Paragraph 1 of Article 4, and Item 4, Subparagraph 1, Paragraph 1 of Article 17 amended and promulgated on January 19, 2011 shall come into force on January 1, 2012. The articles amended and promulgated on August 8, 2012 shall come into force on January 1, 2013. The articles amended and promulgated on June 24, 2015 shall come into force on January 1, 2016.The articles amended and promulgated on December 2, 2015 shall come into force on January 1, 2016.
The effective date of the promulgation made on June 13, 2001, January 8, 2014, and July 27, 2016 shall be decided by the Executive Yuan. The articles amended on June 4, 2014 shall come into force in fiscal year 2015, with the exception that the text of Articles 66-4, 66-6, and 73-2 amended and promulgated on June 4, 2014 shall come into force from the date of January 1, 2015.
The Articles of this Act amended on January 18, 2018 shall come into force retroactively on January 1, 2018；however, the text of Article 5, Article 66-9, Article 71, Article 75, Article 79, Article 108, and Article 110 shall come into force in fiscal year 2018 and the text of Articles 73-2 shall come into force from the date of January 1, 2019.
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