For any individual and their related parties directly or indirectly holding 50% or more of the shares or capital of a foreign affiliated enterprise in a low-tax country or jurisdiction (hereinafter referred to as a "low-tax jurisdiction"), or having a significant influence on such a foreign affiliated enterprise, the said foreign affiliated enterprise is a controlled foreign company.

If a controlled foreign company mentioned in the preceding paragraph is not subject to Article 43-4 of the Income Tax Act and does not meet the criteria of Paragraph 1 of Article 5 of these Regulations, and an individual, either alone or together with their spouse and relatives within the second degree of kinship, directly holds 10% or more of the shares or capital of such a controlled foreign company on December 31 of the current year, the individual shall calculate their income from profit-seeking activities in accordance with Article 12-1 of the Income Basic Tax Act under these Regulations.

For an individual and their related parties directly or indirectly, through related parties, holding a combined total of 50% or more of the shares or capital of an affiliated enterprise in a low-tax jurisdiction as mentioned in the first paragraph, the holding ratio on December 31 of the current year shall be determined by aggregating the holding ratios calculated based on the following methods:

1. Where the individual directly holds the shares or capital of the said affiliated enterprise in a low-tax jurisdiction, the individual’s holding ratio shall be aggregated into the said calculation.

2. Where, through a domestic or foreign affiliated enterprise, the individual indirectly holds the shares or capital of an affiliated enterprise in a low-tax jurisdiction, and the individual’s holding ratio of the shares or capital of such domestic or foreign affiliated enterprise is over 50%, or the individual has control over such domestic or foreign affiliated enterprise, the holding ratios of the shares or capital of the said affiliated enterprise in the low-tax jurisdiction, directly and indirectly held by such domestic or foreign affiliated enterprise, shall be aggregated into the said calculation; if the individual holds no more than 50% of the shares or capital of such domestic or foreign affiliated enterprise, the holding ratio of each layer of such domestic and foreign affiliated enterprise shall be multiplied and then aggregated into the said calculation.

3. For a related party or a nominal party who meets the following criteria, its direct and indirect holding ratios of the shares or capital of the said affiliated enterprise in a low-tax jurisdiction shall be aggregated into the said calculation in accordance with the methods prescribed in the preceding two subparagraphs:

(1) An affiliated enterprise as defined in Subparagraphs 3 to 5 of Paragraph 2 of Article 3.

(2) A related party as defined in Subparagraphs 1 to 10 of Paragraph 3 of Article 3.

(3) The said individual that inappropriately circumvents the constituent elements prescribed in the preceding two items by the share transfer or other arrangements under another's name.

4. For the individual and their related parties, while calculating the direct or indirect holding ratio of the shares or capital of an affiliated enterprise in a low-tax jurisdiction in accordance with the preceding three subparagraphs, the higher figure shall be used in case of any duplicate calculations.

Where the individual and their related parties have inappropriately circumvented the constituent elements specified in the preceding two paragraphs by the share transfer or other arrangements before or on December 31 of the current year, the tax authority may determine the holding ratios of the shares or capital of the foreign affiliated enterprise in a low-tax jurisdiction in accordance with the highest aggregated holding ratio on any given day of the current year, to be calculated according to the methods provided in the preceding two paragraphs.

The term "significant influence" mentioned in the first paragraph shall refer to the individual and their related parties have control over the personnel, finance, or business operations of the foreign affiliated enterprise in a low-tax jurisdiction.