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財政部賦稅署-法規查詢主題專區

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法律與法規命令

Tax Act:
Regulations Governing Application of Accrued Income from Controlled Foreign Company for Profit-Seeking Enterprise
Article 2
Content:
For any profit-seeking enterprise and its related parties directly or indirectly holding 50% or more of shares or capital of a foreign affiliated enterprise registered in a low-tax burden country or jurisdiction, or having a significant influence on such a foreign affiliated enterprise, the foreign affiliated enterprise is a controlled foreign company.
A profit-seeking enterprise shall recognize the investment income of the controlled foreign company mentioned in the preceding paragraph in accordance with these Regulations, and the recognized investment income shall be included in its taxable income of the current year and be subject to income tax accordingly. However, this provision does not apply to a controlled foreign company under Article 43-4 of the Income Tax Act or meeting the requirement of Paragraph 1, Article 5 of these Regulations.
For the profit-seeking enterprise and its related parties directly or indirectly holding 50% or more of the shares or capital of a foreign affiliated enterprise registered in a low-tax burden country or jurisdiction ("foreign affiliated enterprise registered in a low-tax burden country or jurisdiction") as mentioned in the first paragraph, the holding ratio of such profit-seeking enterprise shall be determined based on its aggregate holding ratio of the shares or capital on the settlement date of the annual accounts of the current year, to be calculated in accordance with the following:
1 .Where the profit-seeking enterprise directly holds the shares or capital of a foreign affiliated enterprise registered in a low-tax burden country or jurisdiction, the holding ratio shall be determined based on its aggregate holding ratio of the shares and capital.
2 .Where, through an affiliated enterprise, the profit-seeking enterprise indirectly holds shares or capital of a foreign affiliated enterprise registered in a low-tax burden country or jurisdiction, and its holding of the shares or capital of the affiliated enterprise is over 50%, or it has a significant influence on such affiliated enterprise, the holding ratio of the profit-seeking enterprise in the said foreign affiliated enterprise registered in a low-tax burden country or jurisdiction shall be determined based on its affiliated enterprise's aggregate holding ratio in the foreign affiliated enterprise registered in a low-tax burden country or jurisdiction; if the profit-seeking enterprise holds less than 50% of the shares or capital of the affiliated enterprise, the holding ratio shall be determined based on the aggregation of the multiplication of its affiliated enterprise's holding ratio in each layer.
3. Where a related party or a nominal party meets the following items, such party's holding ratio of the foreign affiliated enterprise registered in a low-tax burden country or jurisdiction shall be calculated in accordance with the methods set forth in the preceding two subparagraphs, to be determined based on such party's aggregate holding ratio in the foreign affiliated enterprise registered in a low-tax burden country or jurisdiction:
(1) The affiliated enterprise directly holds over 50% of the shares or capital of the profit-seeking enterprise.
(2) The affiliated enterprise indirectly holds the shares or capital of the profit-seeking enterprise, and its holding ratio in each layer is over 50%.
(3) According to the Enterprise Accounting Standard and explanations thereof announced by the Accounting Research Development Foundation, or according to IFRS, GAAP, explanations, explanatory announcements, and the Regulations Governing the Preparation of Financial Reports by Securities Issuers, all of which have been accepted by the Financial Supervisory Commission ("financial accounting standards accepted by the Republic of China"), the affiliated enterprise has the controlling power over the profit-seeking enterprise.
(4) An affiliated enterprise under Subparagraphs 4 through 6, Paragraph 2, Article 3 of these Regulations.
(5) A related party under Subparagraphs 1 through 5, Paragraph 4, Article 3 of these Regulations.
(6) Any related party that has been proved to have the leading power over the personnel, financial, and operating policies of the profit-seeking enterprise.
(7) Any profit-seeking enterprise inappropriately circumventing the constituent elements in the preceding six items by transferring its shares to a borrowed name or otherwise by other arrangements.
4. If there is double calculation of the holding ratio of the profit-seeking enterprise's and its related party's direct or indirect holding in a foreign affiliated enterprise registered in a low-tax burden country or jurisdiction in accordance with preceding three subparagraphs, the higher ratio shall be considered.
Where the profit-seeking enterprise and its related parties have inappropriately circumvented the constituent elements in the preceding paragraph by share transfer or other arrangements before the settlement date of the annual accounts of the current year, the tax authority may determine the holding ratio of the shares or capital in the foreign affiliated enterprise registered in a low-tax burden country or jurisdiction based on the highest aggregate ratio on any day of the current year, to be calculated according to the methods provided in the subparagraphs of the preceding paragraph.
The term "significant influence" in the first paragraph shall refer to where the profit-seeking enterprise and its related parties have the leading power over the personnel, finance, or business operation of the foreign affiliated enterprise registered in a low-tax burden country or jurisdiction.
 Update:2018-04-24

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