Incentives for Study Abroad Ph.D elites and Startups Regulations Governing Reduction and Exemption of Income Tax of Foreign Special Professionals
May 21

Taiwan Branch of a Foreign Multinational Corporation applying for and signing APA may reduce the taxation risks from a post-tax review

According to National Taxation Bureau of Taipei, MOF, a worldwide frequently seen Transfer Pricing System is established to ensure the taxing powers, preventing corporate tax avoidance or reduction from unconventional business arrangements. Due to a usual huge amount of money and complexity of transactions among multinational corporations and their affiliates, the both parties of the taxpayer and the tax imposer must contribute costs and workloads to the post tax review. To avoid tax related disputes and administrative burdens aroused from the post tax review, businesses may apply for Advance pricing agreement (APA) with the taxation bureau to reach an agreement on the result of conventional transactions.

The Bureau goes on to elaborate that APA allows the taxpayer to negotiate with the taxation bureau to discuss, according to a comparable party, the transaction results, hypothetical conditions, pricing principles, calculation methods, applicable periods, and other main concerns and to reach an agreement. The agreement is applicable for 3 to 5 years and can be extended for another 5 years under the both parties’ consensus if there are no substantial changes on the environment and the facts related to the agreement. Submitted by the Taiwan branch of a well-known international brand the other day, an APA application has been successfully reviewed by the Bureau and signed by the both parties. This has created a double-win situation for both the taxpayer and the tax imposer.

The Bureau appeals for signing an APA to not only ensure a multinational corporation’s obligation as a taxpayer but reduce the taxation risks derived from the post tax review.

written by Good Earth


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