Apr 15

In 2015, Taiwan MOEA amended the Article 235 Company Act and add a new Article 235-1, which provides that a company should share with its employee at least some certain amount or % of its net profit.

Debating on how to calculate the employee bonus has been ongoing since last year either. Therefore, in Jan 2015, Taiwan MOEA provided an Administrative Order, No 10402413890, suggesting that the employee bonus could be based on a % of “net profit before income tax”.

Because there is no penalty on failing to amend the article of incorporation according to the Article 235-1 of Taiwan Company Act; this Administrative Order becomes a suggestion.

To calculate the employee bonus according to the net profit before tax or net profit after tax, the result of P&L is the same, from the shareholders’ point of view. It is the Ministry of Finance suffers due to this suggestion, the administrative order, because less tax payable; therefore, Taiwan tax office does not follow up to revise any tax regulation or administration order to endorse the Article 235-1.

Because this new article, the Article 235-1, does not stipulate the penalty if a company failing to do so, since then debating on this issues, employee bonus, has been on going to now. Thus far, more than 80% of companies have not filed amendment of its article of incorporation or association.

written by Good Earth

Mar 18

The 2016 VAT audit is starting soon. Businesses should check for any mistakes to avoid any tax penalties. The National Taxation Bureau of Taipei has been using computer system to analyze any usual information to see if there are any tax evasions.

The tax office audits businesses for fraudulent Government Uniform Invoices issued by businesses to help others avoid paying taxes. In addition, the followings are also the targets for tax office audit:

  •  Businesses using fraudulent input invoices for tax deduction
  •  GUIs were issued under the tax exempt or zero tax rate categories for taxable sales transactions.
  •  Whether businesses in the category described in Chapter 4, Section 1 of Value-added and Non-value-added Business Tax Act declare VAT according to Article 36 of the above-mentioned Act.
    (Please refer to the above-mentioned tax law: http://law.moj.gov.tw/Eng/LawClass/LawAll.aspx?PCode=G0340080)
  •  Businesses whose clientele is mostly tourists, businesses in the food and nightclub industries, cosmetic surgery clinics, post-natal care institutions, elderly care institutions who sell goods or services without business registrations, issuing GUI, paying VAT and obtaining Input Documentary Evidence.

The additional tax revue after tax audit in 2014 was 1.9 billion NTD.

There is a “counseling period” before March 31. If businesses find out any mistakes they’ve made, please file for amendment and pay the unpaid tax ASAP before the tax office starts to audit. Otherwise, the fine can be up to five times the unpaid tax amount in addition to the interest.

written by Good Earth

Feb 17

According to the amendment of the Act for Development of Small and Medium Enterprises in February 2015, the salary expense from additional staff employed by small and medium enterprises can be used to calculate an additional 30% of amount deductible. If a small and medium enterprise hires an additional employee who is under 24 years of age, or gives a raise to an entry-level employee, an additional 50% and 30% of amounts deductible can be included. In addition, under the Act for Industrial Innovation, the deductibles for the Intellectual Property income related to R&D expenses shall also be included in 2016 in accordance with the related regulation effective dates. The above-mentioned additional employee salary expense deductions shall be included in the basic income amount when businesses file profit-seeking enterprises income tax return this year.


written by Good Earth

Jan 06

The Legislative Yuan passed an amendment to Statute for Industrial Innovation, which includes changes related to individual and company R&D tax deduction and employee stock rewards.
1. Companies can reward employees with stocks as remuneration, employee stock purchases on issuance of common stock, treasury stocks, stock option certificates, and new restricted employee shares (i.e. restricted stocks). The income tax on employee stock rewards within NT$5 million may be deferred for 5 years.
2. There are 2 choices for tax deduction for R&D investment:
a) Credit up to 15% of the company’s total expenditure on R&D against its business income tax payable for that year
b) Credit up to 10% of the company’s total expenditure on R&D against its business income tax payable within 3 years
No change is allowed once the choice is made.
3. Taiwan citizens or companies may credit up to 200% of the R&D investment against the profit from R&D.

written by Good Earth

Mar 16

The Ministry of Finance submitted to the Executive Yuan a draft amendment to Article 43-3 and 43-4 of the Income Tax Act. The amendment is aimed to prevent businesses from tax evasion and avoidance through the use of tax havens.

written by Good Earth

Jan 30

The input tax cannot be used as deduction from output tax in the case of purchasing raffle prizes for company’s year-end party because they are purchased as rewards for employees. Giving the prizes to the employees does not need to be deemed as selling goods and there’s no need to issue uniform invoices.

If the raffle prizes were intended to be goods for sale, then giving the prizes to the employees should be deemed as selling goods and uniform invoice(s) should be issued because the input tax paid at the time of purchase has been reported and deducted from the output tax. The input tax from the expenses of year-end party venue, food, entertainment, etc. also cannot be used as deduction.

written by Good Earth

Nov 04

With the implementation of FATCA (Foreign Account Tax Compliance Act), reporting to the IRS is scheduled to begin in March, 2015. In the future, related investment and tax information will be exchanged between Taiwan and the U.S. government.

With the signing of the Intergovernmental agreement (IGA), anyone with U.S. citizenship should file all investment and financial information in Taiwan with the IRS or Financial Supervisory Commission in Taiwan.

Taiwan is also negotiating to obtain similar financial information that the Taiwan needs from the U.S. government.

written by Good Earth

Oct 24

1. There are 2 tax credit rate choices for R&D investment. If the company wishes to extend the tax credit to 3 years, the tax credit rate would be 10%. If the company wishes to use the tax credit for the current fiscal year, the tax credit rate is would be 15%.
2. In the case of the value of technical know-how being invested as the capital of the corporation, the tax can be deferred for 5 years according to the laws. The applicable technical know-how includes patents and technical expertise. It should be approved by competent government authority and limited to the know-how used by the company only. Documentary evidence for the value of the know-how must be provided. If such evidence is not provided, only 30% of the claimed value can be used for the deferred taxation.
3. The deferred taxation limit for employee rewards is 5 million NTD. The 5 rewards include employee bonus, restricted stock, employee stock options, treasury shares and cash capital increase

written by Good Earth

Oct 21

Article 1

This Act is enacted to encourage the use of electronic transactions, ensure the security of electronic transactions, and facilitate the development of electronic government and electronic commerce.
For matters not provided in this Act, the provisions of other applicable laws shall govern.

Please refer to the rest of the Electronic Signatures Act on the government website below:
http://law.moj.gov.tw/Eng/LawClass/LawAll.aspx?PCode=J0080037

written by Good Earth

Oct 21

Article 1 (The Legislative Purpose)
This Act is enacted to protect trade secrets, maintain industrial ethics and order in competition, and balance societal and public interests. Matters not provided for in this Act shall be governed by other laws.

Article 2 (The Definition of Trade Secret)
The term ” trade secret ” as used in this Act shall mean any method, technique, process, formula, program, design, or other information that may be used in the course of production, sales, or operations, and also meet the following requirements:

(1).It is not known to persons generally involved in the information of this type;

(2).It has economic value, actual or potential, due to its secretive nature; and

(3).Its owner has taken reasonable measures to maintain its secrecy.

Please refer to the government site below for the full Trade Secrets Act:

http://law.moj.gov.tw/Eng/LawClass/LawAll.aspx?PCode=J0080028

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