The National Taxation Bureau of the Central Area has reiterated that fines for breaches of laws, including environmental, food safety and traffic regulations, are not deductible when calculating taxable income.
Taiwan’s National Taxation Bureau of the Central Area, Ministry of Finance, stated that Article 38 of the Income Tax Act stipulates that losses incurred not in the course of operation of business or subsidiary business, as well as surcharges for delinquent reporting, non-reporting, and delinquent payment of tax as provided in various tax laws, and various fines shall not be considered as expense or loss. The aforementioned fines, according to Article 42-1 of the Enforcement Rules of the Income Tax Act, refer to fines imposed in accordance with various laws and regulations.
The Bureau explained with the following example: A company within its jurisdiction, after reviewing its 2023 Profit-seeking Enterprise Annual Income Tax Return, discovered that it had incurred a TWD 450,000 fine under the Air Pollution Control Act for abnormal emissions, which was listed as a deductible expense. According to the aforementioned provisions, fines cannot be listed as an expense or loss. Therefore, the fine was completely disallowed, and the company was required to make an additional payment of the deficit.
The Bureau would like to remind profit-seeking enterprises that fines imposed for violating various regulations, including those related to environmental pollution, food safety, and traffic violations, cannot be considered as an expense or loss.
This announcement was made on 10 July 2026.
