Regulations governing assessment of profit seeking enterprise income tax

Any economic and product liability risks to be assumed by the transferee; and 7. In the event that the documents cannot be provided within the prescribed time limit, the taxpayer may apply for an extension with the tax collection authorities, and such extension shall not exceed one month from the original deadline.

In other words, the most appropriate tested party will be the least complex of the controlled participants and do not own valuable intangible property or unique assets; or even if it owns such assets but they are similar to the intangible property or unique assets of potential uncontrolled comparables.

The time period should include at least three consecutive years including the year of the subject transaction and two years preceding such transaction. Submission of Annual Report for Advance Pricing Arrangement Article 29 The Applicant shall submit the annual report on the execution of the Advance Pricing Arrangement to the tax collection authorities within the tax return filing period of the applicable fiscal year during which such Advance Pricing Arrangement is in effective, and retain the documents and reports in accordance with Article 24 hereof.

The extension can only be granted once and cannot exceed one month. The factors to be considered when determining the fair market return of the regular contribution, including the functions performed, risks assumed, the assets employed.

The foregoing 4 Paragraphs shall apply to the rendering of services or use of funds. The relative value of the intangible property contributed by each participant may be measured by external market benchmarks that reflect the fair market value of such intangible property, the capitalized cost of developing the intangibles and all related improvements and updates, less an appropriate amount of amortization.

Chapter VI — Investigation, Assessment and Related Adjustments Investigation and Assessment Article 33 Tax collection authorities shall conduct the investigations on the Transfer Pricing of profit-seeking enterprises in accordance with the following rules: The profit-seeking enterprises undertaking controlled transactions are not required to check each transfer pricing method to determine the one which is most appropriate, instead, they may select one or more of a choice of transfer pricing methods to ascertain the most appropriate one for their circumstances based on the comparability or similarity between controlled transactions and their comparables, and the reliability of the adjustments made to eliminate the differences.

A comprehensive business overview, including history, main business activities, and analysis of economic and legal factors that affect transfer pricing.

If the profit-seeking enterprises refuse to produce such documentations related to calculate their taxable income, the competent tax authorities may handle the case pursuant to Article 46 of the Tax Collection Law. In the event that the relationship between two profit-seeking enterprises, due to special market or economic conditions, satisfies the criteria prescribed in Item 3 to 5, Subparagraph 8, Article 3 hereinabove, and nevertheless do not have de facto controlling or subordination relationships, the taxpayers may, prior to filing their annual income tax returns, produce sufficient evidentiary documents to the tax collection authorities for ratification.

Function performed, such as manufacturing and process engineering skills or complexity of installation, and testing function. Cost structures, such as the age of machinery and equipments. Whether there issues related potential double taxation and whether bilateral or multilateral advance pricing arrangements of tax treaty countries are involved.

The documentation provided by profit-seeking enterprises pursuant to the preceding paragraphs should contain a table of contents and an index.

The net operating profit mentioned in the preceding paragraph means the amount of the gross operating profit less the operating expenses, excluding the income unrelated to the tested activities and the extra-ordinary income and loss from going-concern activities of the tested party.

If there are any differences of the factors prescribed in the preceding paragraph between the tested parties with the tested activities and the unrelated parties with the business activities conducted by them, appropriate adjustments should be made to eliminate the effect with respect to the operation profit.

Chapter IV — Documentation Information to be provided upon tax filing Article 21 When filing income tax returns, profit-seeking enterprises shall stand on the prescribed format, disclose the information regarding Associated Enterprises or Related Parties set forth in Subparagraph 1 and 2, Paragraph 1 of Article 4 hereof, respectively, and the information regarding the transactions between the profit-seeking enterprises and such Associated Enterprises and Related Parties.

In order to evaluate the applicability of the resale price method, the factors described in Paragraph 1 of Article 8 shall be considered, particularly the following factors which may affect the gross profit margin: Transfer pricing report, which should include following content: The rationality and compatibility of the allocation of costs and expenses, income and assets between the relevant operating activities and other activities of the related parties.

If such resale price is not available, the applicable resale price is equal to the price at which contemporaneous, previous or subsequent resale s of the same assets are made, provided, however, that appropriate adjustments shall be made pursuant to Paragraph 2 of Article 8 based on the factors as described in Paragraph 1 of Article 8 that may affect the price or profit.

Profit Split Method Article 19 The Profit Split Method prescribed in these Regulations refers to allocate the operating profit to each participant, which shall be calculated based on the contribution to the combined operating profits of all participants in the situation where the activities of the participants of the Controlled Transaction are highly integrated so that the profit or losses cannot be measured individually.

Documents Required for Applications of Advance Pricing Arrangements Article 24 To apply for an Advance Pricing Arrangement with the tax collection authorities, the Applicant or its agent shall furnish the following documents and reports: The enterprises which are required to disclose information shall fill out the relevant form including an organization chart, a brief description of the related parties, a simple summary of controlled transactions, and other related information.

Controlled Transactions and their period for concerned related parties; 3. Functions performed, such as sales, marketing, advertising program, and services. The profit-seeking enterprise should, within one month, provide additional supporting documents as deemed necessary by the tax collection authorities after reviewing the documentation provided.

Where the profit-seeking enterprises failed to comply with the Assessment Regulations thereby resulting in a reduction of tax payable, and the tax collection authorities have made adjustments and assessed the taxable income of related taxpayers in accordance with the ITA and these Assessment Regulations, Article of ITA shall apply to the following specific tax omission or under-reporting situations: In situations where more than one Applicant is involved, one of the Applicants shall be designated to file the application on their behalf.

When evaluating the applicability of Comparable Profit Method, the factors prescribed in Paragraph 1, Article 8 hereof, especially the following factors among the tested parties and tested activities, and the unrelated parties and the related activities conducted by them, shall be considered: The differences of the following factors shall be considered in evaluating the degree of comparability of the circumstances under Paragraph 2 hereof: With respect to an accepted application, the Applicant shall supplement the documents and reports set forth in Subparagraph 3 and 4 of the preceding paragraph within one month of the service of the written notice of acceptance.

Summaries of controlled transactions, including types, procedures, dates, objects, quantities, terms of sale, contract clauses and purpose of transactions.

Amendments to the arrangement; 9.We would like to show you a description here but the site won’t allow us. For determining arm's length pricing or profit of controlled transactions in a fair and reasonable way, the Ministry promulgated the Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax on Non-Arm's Length Transfer Pricing on 28 December, The Ministry of Finance (MOF) amended the "Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax on Non-Arm's-Length Transfer Pricing" ("Taiwan TP.

draft amendment (the Amendment) to the Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax on Non-Arm’s-Length Transfer Pricing (Taiwan TP Guidelines) based on the BEPS Action 13 Final Report.

Regulations Governing of Assessment of Profit-Seeking Enterprise Income Tax on Non-Arm''s-Length Transfer Pricing Note: In case of any discrepancy between the English version and the Chinese text of this Act, the Chinese text shall govern. The Ministry of Finance (MOF) amended the "Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax on Non-Arm's-Length Transfer Pricing" ("Taiwan TP Rules") on 4 Marchto stipulate that profit-seeking enterprises which engage in business reorganization should comply with the arm's-length transaction principle in their related profit distribution.

Regulations governing assessment of profit seeking enterprise income tax
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