Where a profit-seeking enterprise receives dividends or surplus earnings from each controlled foreign company, the amount received has been recognized as investment income and included in the taxable income of the current year under the preceding article shall not be included in the taxable income of the distribution year; the excess amount shall be included in the taxable income of the distribution year.

The difference between the dividends or surplus earnings not included in the taxable income of the distribution year, as mentioned in the preceding paragraph, and the actual amount distributed, which arises from the difference in exchange rates on the distribution date and the rate used to calculate the current-year earnings of the controlled foreign company according to Articles 6 and 7, shall be recognized as the exchange gain or loss of the distribution year.

Where a profit-seeking enterprise has received dividends or surplus earnings from each controlled foreign company, the income tax paid on such dividends or surplus earnings according to the tax laws of the source jurisdiction may be credited against the tax payable of the year in which the investment income is recognized and included in the taxable income, within five years from the day following the filing deadline; any overpaid tax is refundable. Where a profit-seeking enterprise has received dividends or surplus earnings derived from invested enterprises in the Mainland Area, the dividend income tax paid in the Mainland Area, as well as corporate income tax and dividend income tax on the said dividends or surplus earnings paid in any third area, may be credited against the tax payable of the year in which the investment income is recognized and included in the taxable income within the aforementioned time period; any overpaid tax is refundable. The credited amount cannot exceed the increase in tax payable calculated based on the applicable domestic tax rate 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 gain or loss on disposal shall be calculated in accordance with the following provisions:

1. Gain or loss on 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 article cumulative to the disposal date － The actual distributed dividends or surplus earnings of previous years excluded from 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.