Unrealised foreign exchange gains and losses are excluded from Taiwan’s corporate income tax
Taiwan’s Ministry of Finance announced on 12 September 2025 that unrealised foreign exchange gains and losses should not be included in the annual income tax filing.
The National Taxation Bureau of Taipei (NTBT), Ministry of Finance, states that differences between book value and year-end valuation on accounts receivable or accounts payable denominated in foreign currencies are unrealised exchange gains or losses. These unrealised gains or losses shall be excluded from annual Profit-Seeking Enterprise Income Tax Returns.
The Bureau explains that according to Paragraph 1, Article 29 and Paragraph 1, Article 98 of the Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax, recognition of exchange gains or losses is limited to “realised” amounts only. Therefore, any year-end valuation arising from an unfinished transaction, regardless of gains or losses, is considered unrealised and consequently exempt from tax-purpose recognition.
NTBT provides the following example: Company A had several USD accounts receivable from export sales in Year 2023. At the end of the year 2023, the valuation of these accounts at the spot exchange rate resulted in unrealised exchange losses of TWD 5 million. Company A mistakenly reported exchange losses of TWD 5 million in its year 2023 profit-seeking enterprise income tax returns. NTBT, pursuant to Paragraph 1, Article 98 of the Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax, disapproved the deduction of exchange loss of TWD 5 million and assessed a tax payment bill of TWD 1 million for Company A.
NTBT strongly reminds that for profit-seeking enterprise income tax purposes, unrealised exchange gains or losses are not allowed to be reported as taxable income(loss). Profit-seeking enterprises shall pay attention to relevant regulations to avoid possible incorrect reporting and related delinquent taxes.
