The term "current-year earnings" prescribed in these Regulations shall be calculated according to the following provisions:

1. Current-year earnings = The controlled foreign company’s net profit (or loss) after tax of the current year and other profit (or loss) items included in the undistributed surplus earnings of the current year as per the Financial Accounting Standards endorsed by the Republic of China － Investment income (or loss) derived from invested enterprises in non-low-tax jurisdictions recognized under the equity method as prescribed in Subparagraph 2 + Realized investment income (or loss) from invested enterprises in non-low-tax jurisdictions recognized under the equity method as prescribed in Subparagraph 3 + Adjustment amount for the disposal of equity interests of invested enterprises in non-low-tax jurisdictions recognized under the equity method as prescribed in Subparagraph 4 + Amounts calculated as per Article 7.

2. Investment income (or loss) derived from invested enterprises in non-low-tax jurisdictions recognized under the equity method = The sum of net profit (or loss) after tax and other profit (or loss) items included in the undistributed surplus earnings of the current year of the invested enterprise × The weighted average ratio of shares or capital held by the controlled foreign company of that enterprise － Related income tax expenses + Related income tax benefits.

3. Realized investment income (or loss) from invested enterprises in non-low-tax jurisdictions recognized under the equity method = (The resolved amount of surplus earnings distribution of the invested enterprise － Income tax paid on the dividends or surplus earnings of the invested enterprise in its country or jurisdiction) × The controlled foreign company's holding ratio of the invested enterprise's shares or capital on the distribution date － The realized investment loss derived from the invested enterprise × The controlled foreign company's holding ratio of the invested enterprise's shares or capital on the realization date. It shall be processed in accordance with the following provisions:

(1) The resolved amount of surplus earnings distribution of the invested enterprise shall be recognized based on the amount agreed upon by the shareholders of the said invested enterprise or resolved in its shareholder meeting, and the year of the distribution date shall be considered as the accrual year.

(2) If the invested enterprise is in the Mainland Area, the income taxes paid in the Mainland Area on the dividends or surplus earnings are not deductible and shall be processed in accordance with the provisions of Paragraph 3 of Article 9.

(3) The accrual year for realized investment losses is the year of the realization date of such losses. If the invested enterprise incurs a loss, but the original equity capital contributed by the investing enterprise is not reduced, such investment losses are not considered as realized.

(4) If the said invested enterprise resolves to distribute the surplus earnings of the fiscal year 2022 and prior years before or on March 31, 2024, and the profit-seeking enterprise provides sufficient documents to prove such distribution of surplus earnings within the deadline specified in Paragraph 1 of Article 71 of Income Tax Act, then the said resolved amount of surplus earnings distribution is exempt from the calculation as per the preamble.

4. Adjustment amount for the disposal of equity interests of invested enterprises in non-low-tax jurisdictions recognized under the equity method = [The book value (including investment income or loss recognized under the equity method) of the invested enterprises in non-low-tax jurisdictions held directly by the controlled foreign company on the disposal date – The original acquisition cost of the invested enterprises in non-low-tax jurisdictions by the controlled foreign company] + [The book value (including investment income or loss recognized under the equity method) of the invested enterprises in non-low-tax jurisdictions held directly by the controlled foreign company’s invested enterprises in low-tax jurisdictions on the disposal date - The original acquisition cost of the invested enterprises in non-low-tax jurisdiction held directly by the controlled foreign company’s invested enterprises in low-tax jurisdictions] × the holding ratio of shares or capital of the invested enterprises in the low-tax jurisdictions held by the controlled foreign company on the disposal date - Related income tax expenses + Related income tax benefits. When the controlled foreign company indirectly holds the invested enterprises in non-low-tax jurisdictions through multiple layers of invested enterprises in low-tax jurisdictions, and either the controlled foreign company or the intermediary invested enterprise in a low-tax jurisdiction disposes of the equity interest of the invested enterprise of the next layer in a low-tax jurisdiction, the said adjustment amount shall be calculated in accordance with the aforementioned provision.

The calculation of the adjustment amount mentioned in Subparagraph 4 of the preceding paragraph shall be consistent with the following provisions:

1. If the said adjustment amount is already included in the calculation basis of current-year earnings for the current or previous years as prescribed in Subparagraph 1 of the preceding paragraph, or in the amounts calculated according to Subparagraphs 2 to 4 of the preceding paragraph, leading to duplication in inclusion, it shall be excluded; if it leads to duplication in deduction, it shall be included.

2. For a controlled foreign company and the invested enterprises in low-tax jurisdictions directly or indirectly held by this company, if they acquired and recognized the shares or capital of invested enterprises in non-low-tax jurisdictions under the equity method during the fiscal year 2022 and prior years, the original acquisition cost shall be determined based on the book value of such invested enterprises in non-low-tax jurisdictions as of the closing date of the fiscal year 2022.

The positive amounts calculated according to the provisions of Subparagraphs 2 to 4 of the first paragraph shall be included as positive figures in the formula of Subparagraph 1 of Paragraph 1; the negative amounts shall be included as negative figures.

For the components of the current-year earnings prescribed in these Regulations that are recorded or paid in foreign currency, the conversion to New Taiwan Dollar shall be calculated using the annual average exchange rate based on the closing spot buying rate of the said foreign currency announced by Bank of Taiwan at the end of each month (if such rate is not available, then use the cash buying rate), rounded to the fifth decimal place. If the said foreign currency is not one of the currencies announced by Bank of Taiwan, such conversion should be made using the closing spot buying rate of this foreign currency announced by the major correspondent bank of the controlled foreign company at the end of each month (if such rate is not available, then use the cash buying rate), and convert it to any announced currency of Bank of Taiwan, and then processed according to the aforementioned provision.