On 4 March 2019, the National Tax Bureau of the Northern District (NTBND) of the Ministry of Finance of Taiwan issued a clarification on carry-forward of losses for exemption from investment income. Under the clarification following changes includes:
- Generally, net operating losses may be carried forward for up to ten years for offset against net profit, provided that the taxpayer uses a so-called blue return, or the return is certified by an accountant .However, if the taxpayer has investment income that has not been included in taxable income in accordance with Article 42 of the Income Tax Law, such investment income must first be deducted from the carried forward-losses, with the balance of carried-forward losses offset against net profit for the year.
- If the taxpayer has investment income that was not included in taxable income in accordance with section 42 of the Income Tax Act, such investment income must first be deducted from forward losses, and the balance of forward losses must be offset against net income for the year.
- Section 42 contains that dividends received by resident enterprises from investments in other resident commercial enterprises are not included in taxable income (i.e. such dividend income is exempt).
