The term "a foreign profit-seeking enterprise with a place of effective management in the Republic of China" as mentioned in the preceding article shall refer to a foreign profit-seeking enterprise meeting the following requirements:
1.The decision maker who makes significant decisions in business management, financial management, and personnel management (hereinafter "significant management decisions") is a resident in the Republic of China (hereinafter "domestic resident") or is a profit-seeking enterprise having its head office in the Republic of China (hereinafter "domestic profit-seeking enterprise"), or is a foreign profit-seeking enterprise under Article 43-4 of the Income Tax Act. Otherwise, the place where significant management decisions are made is in the Republic of China.
(1)A domestic resident, domestic profit-seeking enterprise, or foreign profit-seeking enterprise under Article 43-4 of the Income Tax Act making significant management decisions shall refer to any one of the situations:
i.Where more than half of the executive shareholders or directors of a foreign profit-seeking enterprise making significant decisions are domestic residents or domestic profit-seeking enterprises, or foreign profit-seeking enterprises under Article 43-4 of the Income Tax Act; any individual appointed or directed by a domestic resident, domestic profit-seeking enterprise, or foreign profit-seeking enterprise under Article 43-4 of the Income Tax Act shall be deemed a domestic resident to be considered in the calculation.
ii.Where a foreign profit-seeking enterprise whose president, general manager, or any person of an equivalent or higher rank making significant decisions is a domestic resident, or a person appointed or directed by a domestic resident, domestic profit-seeking enterprise, or a foreign profit-seeking enterprise under Article 43-4 of the Income Tax Act.
iii.Where there is evidence that a person making significant management decisions for a foreign profit-seeking enterprise is a domestic resident, domestic profit-seeking enterprise, or a foreign profit-seeking enterprise under Article 43-4 of the Income Tax Act.
(2)The determination of a place where significant management decisions are made in the Republic of China shall take into account the following factors:
i.Where a board meeting or a meeting of a similar functional organization is held.
ii.Where the president, general manager, or any other person of an equivalent or higher rank usually carries out business activities.
iii.Where the effective head office is located.
iv.A significant management place from economic and functional perspectives.
v.There is evidence showing it is where a person making significant management decisions for a foreign profit-seeking enterprise usually carries out business activities.
(3)The term "significant management decisions" shall mean the following:
i.Significant business management decisions, including business policies, significant operational or property decisions, modifications, or other similar management decisions.
ii.Significant financial management decisions, including significant investment, fund-raising, financing and financial risks, or other similar management decisions, and in each case where the fund is decided to be raised, lodged, and dispatched is irrelevant.
iii.Significant personnel management decisions, including significant appointment, recruitment, remuneration, or other similar management decisions.
(4)The term "domestic resident" shall refer to an individual meeting the requirements under Paragraph 2, Article 7 of the Income Tax Act; the term "domestic profit-seeking enterprise" shall mean an enterprise meeting the requirements under Paragraph 2, Article 3 of the Income Tax Act.
2. Financial statements, records of accounting books, minutes of meetings of the board of directors or minutes of meetings of the shareholders are prepared or stored in the Republic of China.
3. Major business activities carried out in the Republic of China.
(1)The term "major business activities carried out in the Republic of China" shall refer to the foreign profit-seeking enterprise that does not carry out major business activities in its registered place, but carries out major business activities in the Republic of China.
(2)The major business activities of its affiliate or invested entity shall not be considered in the determination of the major business activities of such foreign profit-seeking enterprise.
Where a constituent element specified in the preceding paragraph is a requirement from Taiwan Stock Exchange Corporation or Taipei Exchange, and has been set forth in the Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings, Taipei Exchange Rules Governing the Review of Foreign Securities for Trading on the TPEx, Taipei Exchange Rules Governing the Review of Emerging Stocks for Trading on the TPEx, and Checking List of Protecting Rights of Foreign Issuer's Shareholders in the Country of Registration, such constituent elements shall not be considered in the determination.
The identification of the constituent elements and facts in the first paragraph shall be based on substantive and economic relationships.