[Taxation] Principles for Determining Income from Sources in the ROC Regulated in Article 8 of Income Tax Act (1)

1. The principles are made for determining the income from sources in the ROC regulated in Article 8 of Income Tax Act (hereinafter called as the “Act”). 2. “Dividends distributed by companies incorporated and registered in accordance with the Company Act of the ROC or by foreign companies authorized by the ROC government to operate within the territory of the ROC” stated in Item 1 Article 8 of the Act refers to the dividends distributed by companies incorporated and registered in accordance with the Company Act of the ROC, excluding profit repatriation by branches of foreign companies incorporated within territory of the ROC. Dividends distributed by foreign companies incorporated in accordance with foreign company acts and authorized by security commission of the ROC to offer and issue securities or Taiwan Depositary Receipt (TDR) and listed on competent security authority shall not be regarded as income from sources in the ROC. 3. “Surplus profits distributed by corporations organized in the form of a cooperative or a partnership within the territory of the ROC” stated in Item 2 Article 8 of the Act refers to profits distributed by cooperatives incorporated and registered within the territory of the ROC in accordance with Cooperatives Act or by sole proprietor and partnership incorporated within the territory of the ROC. 4. “Remuneration for services rendered within the territory of the ROC” stated in Item 2 Article 8 of the Act, for individuals, refers to salaries, income from professional practice and other incomes for service rendered within the territory of the ROC; for profit-seeking entities, refers to remuneration for services rendered under one of the circumstances as follows: (1) All services are rendered within the territory of the ROC. (2) The services must be rendered within and outside the territory of the ROC. (3) The services are rendered outside the territory of the ROC but must be completed with participation and assistance by individual resident or corporation residing within the territory of the ROC. The participation and assistance refer to supports on equipments, labors, expertise or technique, not including basic background information for service rendered or any information to be notified or confirmed. Remuneration for service rendered by foreign companies shall not be regarded as income from sources in the ROC in case the services are rendered outside the territory of the ROC and under one of the circumstances as follows:  (1) No permanent establishment or business agent within the territory of the ROC. (2) Business agent within the territory of the ROC is engaged, but the service is not included in business scope of the agent. (3) Permanent establishment within the territory of the ROC is applied, but it is not used for rendering of the service. Remuneration for services rendered under aforesaid circumstances shall be calculated based on Item 10 of following terms in this document. In case the services rendered by foreign companies within the territory of the ROC are subject to operation of industry, commerce, agriculture, forestry, fishery, animal husbandry, mining and metallurgy, the income shall be recognized according to Item 9 Article 8 of the Act. 5. “Interest obtained from governments of various levels of the ROC, from juristic persons within the territory of the ROC and from individuals residing in the ROC” stated in Item 4 Article 8 of the Act refers to interests on public debts, corporate bonds, financial bonds, various kinds of short-term commercial papers, deposits, beneficial securities or distribution of asset backed securities issued in accordance with Financial Asset Securitization Act, and other loans. Interests on foreign corporate bonds offered or issued with approval from competent security   authority or corporate bonds issued in accordance with foreign acts and traded OTC with approval from competent security authority by foreign companies incorporated in accordance with foreign company acts shall not be regarded as income from sources in the ROC.