Back in 2004, the Ministry of Finance (“MoF”) in Taiwan enacted the ” Regulations Governing Assessment of Profit Seeking Enterprise Income Tax on Non Arm’s Length Transfer Pricing ”, in accordance with the relevant provisions of the Income Tax Act. This came in light of many other tax jurisdictions started to establish rules and regulations to tackle transfer pricing issues for multinational corporations operating in their countries.
Over the past 20 years, Taiwan's tax system has undergone various changes and developments. Taking into account the latest trends in international taxation worldwide, efforts have been made to establish a comprehensive and robust audit system.
Relevant laws, regulations, and provisions
A. Provisions related to Income Tax Law and Transfer Pricing
B. Regulations Governing Assessment of Profit Seeking Enterprise Income Tax on Non Arm’s Length Transfer Pricing
Transfer Pricing Documentation (TPD) requirements
Transfer Pricing Report (Article 22)
Master File (Article 21-1)
Country-by-Country Report (Article 22-1)
Flowchart on TPD Requirements
Similar to other countries that have implemented transfer pricing rules, the tax measures implemented by the Taiwan MoF are a direct response to the global trend among tax authorities to combat profit shifting activities through non-arm’s length transfer pricing approach. The transfer pricing rules in Taiwan align with the international standards and serve as effective measures to prevent tax avoidance. It is anticipated that any development on the global stage will continue to impact the local transfer pricing landscape moving forward. For MNE Groups operating in Taiwan, ensuring full compliance with TPD requirements will be crucial to mitigate potential tax risks.