Regular Mistakes and Negligence When Filing Business Income Tax- part 3 Former Premier Lin Chuan’s Tax Reform Proposal–Who Benefits?
Apr 30

19. Company selling investment products should be aware that if an investment product is not the security as stated under the provision of Securities Transaction Tax Act, the income tax that ceased to be imposed as stated in Article 4-1 of the Income Tax Act does not apply.

20. In the case of profit-seeking enterprises selling shares without the certification or authentication as prescribed in Article 162 of the Company Act, it is recognized as property transaction not as securities transaction. Therefore, when declaring gains or losses of such transactions, it is often mistakenly declared as securities transactions with tax exemption.

21. In the case of a profit-seeking enterprise having no permanent establishment but having a business agent within the territory of the Republic of China, the business agent concerned shall be responsible for filing of income return according to Item 2 Article 73 of the Income Tax Act. Because the profit-seeking enterprise is not authorized by the R.O.C. Government, it is not a “foreign company” as defined in the R. O. C. Company Act, which is not a “company” as stated in Item 1 Article 39 of the Income Tax Act. Therefore, there is yet to be any applicable regulations for offset between profits and losses.

22. Profit-seeking enterprises should compute and declare depreciation expenses for individual assets according to an inventory. However, when a Certified Public Accountant making an assessment and certification, he or she only samples and excludes the ones that exceeds the maximum depreciation expense, but neglects the regulations regarding the depreciation of fix assets being continuously presented annually according to the rate as stated in Item 2 Article 95 of Regulations Governing Assessment of Profit-seeking Enterprise Income Tax and thus fails to adjust the depreciation expenses according to regulations.

23. Companies which received government subsidy for research and development expenses not only should declare the subsidy as income but also deduct the amount from the research and development expenses.

24. The losses incurred from the sales of goods or services as prescribed in Article 39 of the Income Tax Act for profit-seeking enterprises is also applicable for educational, cultural organizations or charities, given that the organizations keep a complete set of account books, use the Blue Returns in the years such losses occurred and in the year of declaring such losses, or such losses have been duly certified by a certified public accountant and declared within the prescribed period. Then, the losses can be used as deductions from the sales income in the next 10 years. However, if the losses are not from the sales of goods or services, Article 39 of the Income Tax Act does not apply.

25. Even though a tax return has been duly certified and filed by a Certified Public Accountant before the deadline, if the tax is not paid in full or paid before the deadline, it is stilled considered as regular tax return and the preferential treatments such as a higher entertainment expense limit and the offset between Profits and Losses can no longer apply.

26. In case of a profit-seeking enterprise with its head office within the territory of the Republic of China declaring its incomes from both within and without of the territory of the Republic of China, special attentions should be paid in checking if all the foreign incomes corresponding to the deductibles from taxes paid in the source countries are declared.

written by Good Earth

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