2018.12.20
Feng-Wei Lin
The Ministry of Finance issued the Tai-Cai-Shui-10704683960 Circular of December 20, 2018 (hereinafter, the “Circular”) to interpret relevant requirements for exempting consolidated income taxes on gains obtained by victims in criminal fraud cases criminally concluded by courts.
It was first pointed out in this Circular that when a court renders a final decision on a criminal case where the defendant committed an offense of fraud under Article 339 of the Criminal Code for defrauding the victim into investing his/her funds, if the gains provided by the defendant to the victim in order to convince and entice the victim to invest do not exceed the principal of investment not recovered by the victim, no income tax shall be imposed on the gains.
It was further pointed out in this Circular that if the compensation or settlement payment received by the victim due to such fraud case plus the gain previously received exceed the principal of investment, the portion in excess shall be included in the income subject to a consolidated income tax for the year in which the compensation is received.