The term "related parties" in the preceding article shall include affiliated enterprises and related parties other than the affiliated enterprises.

The term "affiliated enterprises" in the preceding paragraph shall refer to where there are any of the following situations between a profit-seeking enterprise and another domestic or foreign profit-seeking enterprise:

1. A profit-seeking enterprise directly or indirectly holds 20% or more of the total issued voting shares or total capital of another profit-seeking enterprise.

2. Twenty percent or more of the total issued voting shares or total capital of a profit-seeking enterprise and another profit-seeking enterprise are directly or indirectly owned or controlled by the same person.

3. A profit-seeking enterprise holds the highest percentage of the total issued voting shares or total capital of another profit-seeking enterprise and such percentage reaches 10% or more.

4. One half or more of the executive shareholders or directors of a profit-seeking enterprise and those of another enterprise are the same.

5. The aggregate number of directors of a given profit-seeking enterprise appointed by another profit-seeking enterprise and the other profit-seeking enterprise(s), in which the second enterprise directly or indirectly holds over 50% of the total issued voting shares or total capital of the last enterprise, is amounting to half or more of the total number of directors of the first enterprise.

6. The chairman, general manager, or its equivalent or superior of one profit-seeking enterprise is that of another enterprise, or has the relation of a spouse or relatives within the second degree of kinship with that of another profit-seeking enterprise.

7. A profit-seeking enterprise directly or indirectly controls the personnel, finance, or business operations of another profit-seeking enterprise, including:

(1) A profit-seeking enterprise appoints the general manager or its equivalent or superior of another profit-seeking enterprise.

(2) A profit-seeking enterprise that is not a financial institution lends money or guarantees loans to another profit-seeking enterprise to an amount representing 1/3 or more of its total assets.

(3) A profit-seeking enterprise cannot commence its production or business activities without the other enterprise's provision of patents, trademarks, copyrights, secret formulas, proprietary technology, or any franchises, in which the underlying sales of such production and business activities account for 50% or more of the total sales of the former profit-seeking enterprise in the same year.

(4) The price and terms of a profit-seeking enterprise's purchase of raw materials, components, and goods are controlled by another profit-seeking enterprise; and the underlying purchase of such raw materials, components and goods accounts for 50% or more of the total purchase of raw materials, components and goods of the former profit-seeking enterprise in the same year.

(5) The sales of products of a profit-seeking enterprise are controlled by another profit-seeking enterprise, and the underlying sales of such products account for 50% or more of the total sales of the former profit-seeking enterprise.

8. A profit-seeking enterprise and another profit-seeking enterprise have entered into a joint venture agreement, or an agreement to conduct business jointly.

9. A profit-seeking enterprise and another profit-seeking enterprise are parties to the same trust relation as the settlor, trustee, or beneficiary, where the trust property consists of shares or capital of an affiliated enterprise in a low-tax jurisdiction. However, if the trustee is a trust enterprise licensed by the competent authority in its jurisdiction, such a trustee is regarded as a non-affiliated enterprise.

10. Other sufficient evidence that demonstrates that the said profit-seeking enterprise has control over or the ability to participate in the decision-making of the personnel, finance, business operations, or management policies of another profit-seeking enterprise.

If due to special market or economic factors both a profit-seeking enterprise and another profit-seeking enterprise have any one of the situations prescribed in Items 3 to 5 of Subparagraph 7 of the preceding paragraph, but there is no substantial cross-control relation between the two profit-seeking enterprises, unless it is a case of a profit-seeking enterprise versus a public enterprise, or a case of an agent/distributor versus a monopolistic enterprise under Article 7 of the Fair Trade Act, which may be regarded as a case of two unaffiliated enterprises, the profit-seeking enterprise may provide sufficient evidentiary documents to their tax authorities for ratification before filing their annual income tax returns. Once the documents provided have been ratified, the two profit-seeking enterprises may be regarded as unaffiliated enterprises.

The term "related parties other than the affiliated enterprises" in the first paragraph shall refer to a domestic or foreign individual, or an educational, cultural, public welfare, or charitable organization or institution that has any of the following relations with the profit-seeking enterprise:

1. A foundation has received donations from the profit-seeking enterprise amounting to 1/3 or more of its total funds in its balance sheet.

2. The aggregate number of directors represented by a profit-seeking enterprise and its directors, supervisors, general manager, or its equivalent or superior, or the spouse or relatives within the second degree of kinship of whom reach one half or more of the total number of directors of the foundation.

3. A profit-seeking enterprise’s directors, supervisors, general manager or its equivalent or superior, vice general managers, assistant general managers and department heads under the direct supervision of the general manager.

4. The spouses of a profit-seeking enterprise’s directors, supervisors, general manager, or its equivalent or superior.

5. The relatives within the second degree of kinship of a profit-seeking enterprise’s chairman of the board, or general manager or its equivalent or superior.

6. Persons in the same trust relationship with the profit-seeking enterprise as the settlor, trustee, or beneficiary, where the trust property consisted of shares or capital of an affiliated enterprise in a low-tax jurisdiction, including the settlor, trustee, or beneficiary themselves, their spouses and relatives within the second degree of kinship.

7. Other persons sufficiently demonstrated to have control over or the ability to participate in the decision-making of the personnel, finance, business operations, or management policies of the said profit-seeking enterprise.