Direct expenses incurred in the course of business for social entertainment for which positive evidence of payment has been received may be listed as expenses or losses to the extent as provided hereunder:
1. If the value of yearly purchases of an enterprise is less than NT$ 30,000,000, direct expenses for social entertainment incurred at the time and for the purpose of purchase, shall not exceed 0.15% of the value of purchases for the whole year and, in case of an enterprise approved to use Blue Returns, such expenses shall not exceed 0.2% of the value of purchase for the whole year. If the value of yearly purchases is between NT$ 30,000,000 and NT$ 150,000,000, the expenses for social entertainment shall not exceed 0.1% of the portion between NT$ 30,000,000 and NT$ 150,000,000 and, in the case of an enterprise approved to use the Blue Returns, such expenses shall not exceed 0.15%. If the value of yearly purchases is between NT$ 150,000,000 and NT$ 600,000,000, the expenses for social entertainment shall not exceed 0.05% of the portion between NT$ 150,000,000 to NT$ 600,000,000 and, in the case of an enterprise approved to use the Blue Returns, such expenses shall not exceed 0.1%. If the value of yearly purchase exceed NT$ 600,000,000, the expenses for social entertainment shall not exceed 0.025% of the portion in excess of NT$ 600,000,000 and, in the case of an enterprise approved to use the Blue Returns, such expenses shall not exceed 0.05%;
2. If the value of yearly sales of an enterprise is less than NT$ 30,000,000, direct expenses for social entertainment incurred at the time and for the purpose of sales shall not exceed 0.45% of the value of sales for the whole year and, for an enterprise approved to use the Blue Returns, such expenses shall not exceed 0.6% of the value of sales for the whole year. If the value of yearly sales is between NT$ 30,000,000 and NT$ 150,000,000, the expenses for social entertainment shall not exceed 0.3% for the portion of the value of sales in excess of NT$ 30,000,000 to NT$ 150,000,000 and, for an enterprise approved to use the Blue Returns, such expenses shall not exceed 0.4%. If the value of yearly sales is between NT$ 150,000,000 and NT$ 600,000,000, the expenses for social entertainment shall not exceed 0.2% for the portion of the value of sales between NT$ 150,000,000 and NT$ 600,000,000 and for an enterprise approved to use the Blue Returns, such expenses shall not exceed 0.3%. If the value of yearly sales is exceeds NT$ 600,000,000, the expenses for social entertainment shall not exceed 0.1% for the portion of the value of sales in excess of NT$600,000,000, and for an enterprise approved to use the Blue Returns, such expenses shall not exceed 0.15%.
3. If the amount of yearly freight charges of an enterprise is less than NT$ 30,000,000, direct expenses for social entertainment incurred at the time and for the purpose of transportation of goods, shall not exceed 0.6% of the freight charge for the whole year and, for an enterprise approved to use the Blue Returns, such expenses shall not exceed 0.7% of the freight charges for the whole year. If the amount of yearly freight charges is between NT$ 30,000,000 and NT$ 150,000,000, the expenses for social entertainment shall not exceed 0.5% for the portion of the freight charges between NT$ 30,000,000 to NT$ 150,000,000 and, for an enterprise approved to use the Blue Returns, such expenses shall not exceed 0.6%. If the yearly freight charges in excess of NT$ 150,000,000,the expenses for social entertainment shall not exceed 0.4% for the portion of the value of the freight charges for the whole year and, for an enterprise approved to use the Blue Returns, such expenses shall not exceed 0.5%.
4. If the yearly business income of those businesses engaged in providing services or credit is less than NT$9,000,000, direct expenses for social entertainment incurred at the time and for the purpose of consummating business transaction for the supply of services or credit shall not exceed 1% of the business income for the whole year and, for an enterprise approved to use the Blue Returns, such expenses shall not exceed 1.2% of the business income for the whole year. If the yearly business income is between NT$ 9,000,000 and NT$ 45,000,000, the expenses for social entertainment shall not exceed 0.6% for the portion of business income is between NT$ 9,000,000 and NT$ 45,000,000 and, for an enterprise approved to use the Blue Returns, such expenses shall not exceed 0.8%. If the yearly business income exceeds NT$ 45,000,000, the expenses for social entertainment shall not exceed 0.4% for the portion of business income in excess NT$ 45,000,000 and, for an enterprise approved to use the Blue Returns, such expenses shall not exceed 0.6%.
The limit of various entertainment expenses allowed for disbursement by state-owned enterprises shall be determined by the authority-in-charge and included in their budgets. For a profit-seeking enterprise which engages in export trade and earns foreign exchange receipts, besides listing as expenses the payment of social entertainment expenses as prescribed in the provisions of the sup-paragraphs of the preceding Paragraphs a special social entertainment expense may also be listed as expenses, not exceeding 2% of its total foreign exchange receipt settlement of the current year.