May 2018
Interpretation concerning the requirement for calculating the amount of supplemental tax and the penal basis for excessive distribution of the tax deductible amount by a profit-seeking enterprise (Taiwan)
2018.3.28
Tiffany Hsiao
The Ministry of Finance issued the Tai-Cai-Shui-10604687570 Directive of March 28, 2018 (hereinafter, the "Directive") to interpret the requirement for calculating the amount of supplemental tax and the penal basis for excessive distribution of the tax deductible amount by a profit-seeking enterprise.
According to the Directive, beginning with January 1, 2015, if a profit-seeking enterprise's distribution of its tax deductible amount for its dividends or net earnings to its shareholders or members is subject to the circumstance of excessive distribution of the tax deductible amount under Article 114-2 of the Income Tax Law, whether the shareholders or members are individuals residing in the territories of the Republic of China or not, the excessively distributed tax deductible amount which shall be supplemented and the penal basis shall be half of the excessively distributed tax deductible amount stipulated in such article. With respect to the excessively distributed tax deductible amount supplemented by a profit-seeking enterprise pursuant to the above requirement, the supplemented tax amount may be doubled for inclusion in the balance of the tax deductible account for shareholders on the day of supplemental payment.
It should be noted that the Directive also pointed out that the requirements of this Directive should apply to cases whose assessment was not finalized before the promulgation date of this Directive, and that there would be no change to cases whose assessment has become final. In addition, this Directive also abolished the Tai-Cai-Shui-10404030450 Directive of December 30, 2015.
Tiffany Hsiao
The Ministry of Finance issued the Tai-Cai-Shui-10604687570 Directive of March 28, 2018 (hereinafter, the "Directive") to interpret the requirement for calculating the amount of supplemental tax and the penal basis for excessive distribution of the tax deductible amount by a profit-seeking enterprise.
According to the Directive, beginning with January 1, 2015, if a profit-seeking enterprise's distribution of its tax deductible amount for its dividends or net earnings to its shareholders or members is subject to the circumstance of excessive distribution of the tax deductible amount under Article 114-2 of the Income Tax Law, whether the shareholders or members are individuals residing in the territories of the Republic of China or not, the excessively distributed tax deductible amount which shall be supplemented and the penal basis shall be half of the excessively distributed tax deductible amount stipulated in such article. With respect to the excessively distributed tax deductible amount supplemented by a profit-seeking enterprise pursuant to the above requirement, the supplemented tax amount may be doubled for inclusion in the balance of the tax deductible account for shareholders on the day of supplemental payment.
It should be noted that the Directive also pointed out that the requirements of this Directive should apply to cases whose assessment was not finalized before the promulgation date of this Directive, and that there would be no change to cases whose assessment has become final. In addition, this Directive also abolished the Tai-Cai-Shui-10404030450 Directive of December 30, 2015.
