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The Legislative Yuan passed 5 amendments to laws regarding residence rights and land rights, including Real Estate Broking Management Act, Equalization of Lands Rights Act, Land Administration Agent Act, and Land Acquisition Act.

According to the amended laws, 3 days after transferring real estate ownership or closing a real estate deal, the general public, real estate agents or land administration agents must register the case including the purchase price with the competent government department.

If real estate agents or land administration agents are found to register false purchase price, they will be fined NTD 30,000 to NTD 150,000; in the case of the general public, they will only be fined NTD 30,000 to NTD 150,000 when failing to correct the registered purchase price after the government requests the correction.

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Taipei National Tax Administration under the Ministry of Finance announced that withholding agents should submit a list of employee income for the whole year to the tax office by the end of January of the following year, and the employees that received the income should file and pay individual income tax according to the regulations.  If withholding agents fail to withhold employee income, the withholding agents will be penalized.

When any organization, institution, school, enterprise, bankruptcy estate, or practitioner of profession pay salary, interest, rental, commission, royalty, cash award or prize given in a contest or game competition, prizes of a chance winning, retirement pay, severance pay, separation pay, resignation pay, life-time pension, old-age pension not covered by insurance benefits, reward for information or accusation, and fees for professional practices, withholding agents involved shall withhold and pay tax at the time of payment.  Withholding agents failing to withhold income tax according to the regulations will be ordered to withhold and pay the unpaid or underpaid taxes, and also pay a penalty of 100% - 300% of the unpaid or underpaid amounts.

If withholding agents have filed non-withholding tax statements and send them to the income receivers, and the income receivers have filed and pay the tax according to the regulations, then the withholding agents will not be ordered to pay the taxes, but will still be ordered to pay a penalty of 100% the unpaid amount for failing to withhold tax.  If withholding agents haven’t withheld tax according to the regulations, but file non-withholding tax statements within the filing period and pay the tax and the interests before the tax office finds out, then the withholding agents will not be penalized.

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Taiwan-Switzerland tax agreement entered into force on December 13^th, 2011.  Switzerland agreed to exchange information on tax matters in the agreement.  Therefore, Taiwan can ask Switzerland to provide income information received by Taiwanese from Swiss banks, and vice versa.  This will assist investigation in tax evasion.  In addition, the tax that Taiwanese pay in Switzerland will be lowered because double taxation is abolished under the tax agreement. 

Because the agreement abolishes double-taxation, Taiwanese and Swiss will both avoid double taxation.  In addition, tax on business income, dividends, interests, royalties, etc. that Taiwanese have to pay in Switzerland may also be lowered.

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The Legislative Yuan passed amendments to part of the articles in Income Tax Law:  The due dates for withholding agents to file Withholding and Non-Withholding Income Tax Statements for various types of income and to mail the statements are postponed to February 5^th and February 15^th, when there are more than 3 days of national holidays during the filing period. 

The Ministry of Finance announced the amendment is effective for the long Chinese New Year holidays in January 2012 to alleviate the workload of tax filing departments.  According to the current Income Tax Law, the due dates for withholding agents to file Withholding and Non-Withholding Income Tax Statements and to mail the statements to the taxpayers are January 31^st and February 10^th.

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The due date for filing 2011 Withholding and Non-Withholding Income Tax Statements for income and dividend is still January 31^st, 2012.  Even though the filing period is around New Year and Chinese New Year holidays, the Ministry of Finance decided not to extend the filing period.  However, online filing is available as usual during New Year and Chinese New Year.

According to the Tax Laws, withholding agents failing to withhold income tax according to the regulations must pay the unpaid or underpaid taxes, file the amended withholding tax statements and pay a penalty of 100% of the unpaid or underpaid amounts.

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The other income received, such as monetary settlement or damage, is not subjected to Value-Added Tax, because the business income is not from products sold or services provided.  Therefore, there is no need to issue a Government Uniform Invoice.

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Securities and Future Bureau under Financial Supervisory Commission, R.O.C. announced that they will amend the Financial Accounting Standards as soon as possible; the use of IFRS 9 will not become mandatory for accounting period commencing on January 1, 2012.

IASB has announced that the effective date of IFRS 9, accounting for Financial Instruments, is postponed from 2013 to 2015.

IFRS 9 reduces Financial Instruments classifications from 5 to 2; the financial assets, such as Hold to Maturity Bond, Low Liquidity Bond or Structured Financial Instruments, which were accounted for on cost basis, will be accounted for on fair market value basis under the new the classification system.  In the future, when assessing market values, some assets may incur loss; the book value will be impacted significantly.

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National Tax Administration commences withholding tax auditing, focusing on the withholding tax on dividends distributed to alien individual and foreign corporations.

According to the tax laws, when paying Dividend Net of Withholding Tax on dividends distributed to nonresidents and foreign corporations, withholding agents should withhold tax, deposit the amount to the National Treasury within 10 days of withholding, issue Withholding Tax Statement, and file the statement to the competent tax office.

If withholding agents failed to withhold tax according to the regulations and file

Withholding Tax Statement, there’s a penalty of up to 100% of the amount not paid.

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On November 2, 2011:

• Ministry of Economic Affairs (MOEA) suggests:
  The withholding tax on the royalties earned by foreign business entities which have filed a patent application at the Intellectual Property Office under MOEA could be included in the scope of tax exemption under Article 4 of Income Tax Act.
  The Ministry of Finance agrees to evaluate the feasibility of this.

• The Chinese National Federation of Industries (CNFI) suggests amending Article 60 of the Income Tax Act to include goodwill amortization schedule similar to the depreciation system applied to fixed assets.
  The Ministry of Finance agrees to set forth rules allowing goodwill to be amortized as soon as possible to streamline merger and acquisition processes.

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According to the Political Donation Act in Taiwan, the limits on the contributions made to political parties, political organizations or political candidates by businesses are as follow:

The total amount of contributions made to the same political candidate by a business each year may not exceed NT$ 1,000,000.
The total amount of contributions made to different political candidates by a business each year may not exceed NT$ 2,000,000.

The total amount of contributions made to the same political parties or political organizations by a business each year may not exceed NT$ 3,000,000.
The total amount of contributions made to different political parties or political organizations by a business each year may not exceed NT$ 6,000,000.

Businesses should be aware of these limits when making a political contribution to make sure it is eligible for tax deduction.

There is another limit regarding donations made to political parties: the political contribution is only eligible for tax deduction, when it is made to the political parties which obtain 2% of the votes in the election for Member of Legislative Yuan in the same year.

Political Donation Act also states that businesses with an accumulative deficit that has not been paid off are not permitted to make a political donation.

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