Income or losses derived from transactions of house and land incurred by a profit-seeking enterprise for the current year, where the amount of the income or losses shall be the total revenue minus the costs, expenses, and losses. However, the land value increment tax paid in accordance with the Land Tax Act shall be excluded from the expenses, unless such tax paid is prorated to the part of the total amount of land value increment not being deducted from the amount of the income.
Income derived from transactions of house and land incurred by a profit-seeking enterprise calculated in accordance with the preceding Paragraph, after deduction of the total amount of land value increment calculated in accordance with the assessed present value provided in Paragraph 1, Article 30 of the Land Tax Act, shall not be added to the amount of income of the profit-seeking enterprise. The tax payable shall be computed separately in accordance with the following tax rates. If the enterprise has no fixed establishment within the territory of the Republic of China, its business agent or an entrusted agent shall be responsible for filing of income return and paying the income tax:
1. A profit-seeking enterprise having its head office within the territory of the Republic of China:
(1) The transferred house and land that have been held for a period of no more than 2 years shall be taxed at 45%.
(2) The transferred house and land that have been held for a period of more than 2 years but no more than 5 years shall be taxed at 35%.
(3) The transferred house and land that have been held for a period of more than 5 years shall be taxed at 20%.
(4) House and land that have been held for a period of no more than 5 years and are transferred because of any involuntary cause announced by the Ministry of Finance shall be taxed at 20%.
(5) A profit-seeking enterprise who sells house and land where the house is built in partnership with a business entity, and the share of land associated with the unit has been held for a period of no more than 5 years shall be taxed at 20%.
(6) House and the share of land associated with the house that are transferred for the first time after the completion of construction and have been held for a period of no more than 5 years, where the house and land are acquired through participation in urban renewal by providing land, legal buildings, other rights, or capital in accordance with the Urban Renewal Act or participation in reconstruction in accordance with the Statute for Expediting Reconstruction of Urban Unsafe and Old Buildings shall be taxed at 20%.
2. A profit-seeking enterprise having its head office outside the territory of the Republic of China:
(1) The transferred house and land that have been held for a period of no more than 2 years shall be taxed at 45%.
(2) The transferred house and land that have been held for a period of more than 2 years shall be taxed at 35%.
The amount of losses derived from transactions of house and land incurred by a profit-seeking enterprise for the current year calculated in accordance with provisions of Paragraph 1 shall be deducted first from the income derived from transactions of house and land computed at the same applicable tax rate for the current year. Only when such income is insufficient to be deducted, then the portion of losses which are not yet deducted completely may be deducted from the income derived from transactions of house and land computed at the different applicable tax rate for the current year. If there is a subtraction balance of losses after the subtraction in the current year, the losses may be deducted from the income derived from transactions of house and land within ten years from the year after such losses are derived.
House and the share of land associated with the house that are transferred for the first time after the completion of construction shall be exempt from application of the preceding two Paragraphs. Income derived from such transactions of house and land incurred by a profit-seeking enterprise calculated in accordance with provisions of Paragraph 1, after deduction of the total amount of land value increment calculated in accordance with the assessed present value provided in Paragraph 1, Article 30 of the Land Tax Act shall be added to the amount of income of the profit-seeking enterprise. If the balance is a negative figure, the transaction income shall be counted as zero. The losses derived from transaction of house and land may be deducted from the income of the profit-seeking enterprise. However, the total amount of land value increment prescribed above shall not be permitted to make a deduction.
In the course of an investigation or a recheck conducted by the tax collection authority, where a profit-seeking enterprise fails to present the account books and documents of evidence to prove the amount of his income derived from transaction of house and land, the tax collection authority shall determine the amount of the transaction income based on the investigative information. When the investigative information of the cost or expense is not available, the tax collection authority may assess the cost, based on the assessed value of the house and the present value of land at the time of acquisition (which shall be duly adjusted with the price index announced by the government); and may assess the expense, based on 3% of the transaction price, and such expense shall not exceed NT$300,000.
A profit-seeking enterprise organized as a sole proprietorship or a partnership that has any income derived from transactions of house and land, shall be subject to assessment of income tax in accordance with the provisions of Articles 14-4 to 14-7 of this Act, and such income shall not be added to the amount of income of the profit-seeking enterprise. The provisions of the preceding five Paragraphs shall not apply to a profit-seeking enterprise organized as a sole proprietorship or a partnership.