Taiwan’s Ministry of Finance issued Ruling No. 10604557490 on 6 June 2017, providing clarification to the proposed controlled foreign company (CFC) regulations which was issued on 9 November 2016.

According to the proposed CFC rules, Taiwanese company will be obliged to include its pro rata share of the income of the CFC in its taxable income if the company and its related parties directly or indirectly hold more than 50% of the shares of a company located in a low tax jurisdiction or control the operations of the CFC.

Jurisdictions with a corporate income tax rate lower than 11.9% are considered as low-tax jurisdictions and the ruling clarifies that 11.9% is the statutory tax rate.

According to the proposed regulation issued last year, Taiwanese companies are required to submit their CFC’s financial statement certified by a CPA of the CFC’s local jurisdiction when filing the Taiwan tax return to clarified its income from the CFC. However, the Ruling would accept uncertified financial statements or the equivalent, if their precisions can be proved by other ways and also approved or acknowledged by the local tax collection offices.