Taiwan’s tax authority reminded enterprises to correctly report securities gains under the Alternative Minimum Tax, applying FIFO to determine holding periods. Shares held over three years qualify for a half-inclusion tax benefit, while shorter holdings are fully counted.
Taiwan’s securities market has been highly active. Not only have individual investors participated extensively, but many profit-seeking enterprises have also used idle funds for stock investments to increase non-operating income. When realising investment gains, the Taiwanese tax bureau clarified, on 10 July 2026, that enterprises should pay attention to the reporting and taxation rules under the Alternative Minimum Tax Act regarding income from securities and futures transactions.
The Southern District National Taxation Bureau of the Ministry of Finance explained that the basic income of a profit-seeking enterprise is composed of “taxable income” plus exempt income items such as “securities and futures transaction income.” To encourage long-term investment, Article 7, Paragraph 3 of the Alternative Minimum Tax Act stipulates that, starting from the 2013 tax year, if a profit-seeking enterprise sells shares held for more than three years, the net positive balance of such transactions (after deducting losses from the sale of shares held for more than three years) shall be included at only half its amount in the calculation of securities transaction income.
However, for shares held less than three years, the entire transaction income must be included. The holding period of shares sold must be calculated using the First-In, First-Out (FIFO) method.
For example, Company A sold 40,000 shares of a listed company at the end of 2024, earning TWD 10 million in profit. When filing its 2024 alternative minimum tax return, the company reported the entire profit as securities transaction income.
Upon review, the tax bureau applied the FIFO method and found that the shares sold consisted of 30,000 shares acquired in January 2021 and 10,000 shares acquired in May 2023, with profits ofTWD 8 million and TWD 2 million respectively. Of these, the TWD 8 million profit from shares held over three years qualifies for the half-inclusion rule, meaning only TWD 4 million should be counted.
The TWD 2 million profit from shares held less than three years must be fully included. Therefore, the bureau determined that Company A’s securities transaction income to be included in basic income wasTWD 6 million (TWD 4 million +TWD 2 million), and refunded the excess tax paid.
The bureau reminds profit-seeking enterprises that, in addition to keeping proper accounting records for stock transactions, they must also apply the FIFO method when calculating holding periods upon sale, in order to benefit from the preferential half-inclusion rule for long-term securities transaction income.
