[Taxation] Principles for Determining Income from Sources in the ROC Regulated in Article 8 of Income Tax Act (3)

13. Comprehensive service rendered by foreign corporations within the territory of the ROC refers to those services concerning various businesses simultaneously (e.g. service combining use of patent, service performance and equipment rental). Tax collection authority shall first clarify the category of the incomes obtained by performing the service and classify the incomes in accordance to respective nature other than recognizing all the incomes as other profits. Income from aforesaid comprehensive service which is subject to operation of industry, commerce, agriculture, forestry, fishery, animal husbandry, mining, and metallurgy corporations shall be recognized in accordance with Item 9 Article 8 of the Act. In case the income from operation within the specified business scope is subject to natures of Item 3, Item 4, Item 5, Item 6, Item 7 and Item 11 Article 8 of the Act, categories of the income shall be classified. 14. In case corporation cooperates with foreign organization on joint technology development and all participants share the intellectual property rights and R&D payment for the joint technology development in accordance with the agreement is proved to be cost contribution for R&D, and all participants obtain reasonable expected profit and no royalty payment or illegal tax avoidance are found, the payment shall not be recognized as income from source in the ROC. 15. Income obtained by non-residents in the territory of the ROC or foreign corporations from sources in the ROC determining by Article 8 of the Act shall be subject to income tax withholding or the withholder shall deduct the withholding tax at payment.

In case foreign corporations without permanent establishment or business agent obtain income for service stated in Item 3 Article 8, rental stated in Item 5 Article 8, profit from operation stated in Item 9 Article 8, awards or grants obtained from contests, games or lotteries Item 10 Article 8, or other profits stated in Item 11 Article 8 of the Act, the withholder shall deduct the withholding tax at payment. Within 5 years after obtaining the income, the foreign corporation shall have individual or corporation with permanent establishment in the ROC as agent to apply with competent tax collection authority in accordance with the location of withholder for recalculation of the income by deducting related cost and expense. Tax collection authority can calculate the income according to accounting books, receipts and audit report issued by CPA provided by the foreign corporation and refund overpaid tax. Calculation of the income shall be applied case by case or collectively applied for each year according to respective category. 16. This principle shall be applicable for determining income from sources in the ROC obtained by person, corporation, community or other organizations from Mainland China in accordance with Article 25 of Regulations Governing the Relations between the People of the Taiwan Area and the People of the Mainland China Area.