Where a profit-seeking enterprise has received distributed dividends or earnings from each of its controlled foreign companies, the portion that has been recognized as investment income in accordance with the preceding Article, and has been included in the taxable income of the current year, shall not be included in the taxable income of the distribution year; the portion exceeding the recognized income shall be included in the taxable income of the distribution year.
Where a profit-seeking enterprise has received distributed dividends or earnings from each of its controlled foreign companies, and has paid the taxes for the distributed dividends or earnings in accordance of the tax laws of the source place, within five years starting from the following day of the expiration of the filing period of the year in which such investment income is recognized, the paid taxes may be deducted from the payable tax amount of the year in which the investment income is recognized, and may file for a refund of any overpayment of the tax. Where a profit-seeking enterprise has received distributed dividends or earnings from an invested enterprise of Mainland China, the taxes for such dividends or earnings paid in Mainland China, together with the corporate income tax and the taxes for the dividends or earnings paid in a third region, may be deducted from the payable tax amount of the year in which the investment income is recognized within the aforementioned time period, and may file for a refund of any overpayment of the tax. The deducted amount shall not exceed the tax payable amount calculated with the applicable tax rate of the Republic of China due to the inclusion of such investment income.
Where a profit-seeking enterprise disposes of the shares or capital of a controlled foreign company, the losses or profits resulted from the disposal shall be calculated in accordance with the following:
1.Losses/profits resulted from the disposal = income resulted from the disposal – original acquisition cost – the balance of the recognized investment income of the controlled foreign company on the disposal date　× disposal ratio.
2.The balance of the recognized investment income of the controlled foreign company on the disposal date, as shown in the preceding subparagraph = the investment income of the controlled foreign company that has been recognized in accordance with Paragraph 1 of the preceding paragraph cumulative to the disposal date – the actual distributed dividends or earnings of previous years excluded in the taxable income of the distribution year in accordance with Paragraph 1 – the deductions of the investment income balance of the controlled foreign company, to be calculated based on the disposal ratios of previous years.