Taiwan's National Taxation Bureau of Taipei clarified that only realised foreign exchange gains and losses can be recognised for profit-seeking enterprise income tax purposes, ruling out book adjustments tied purely to year-end exchange rate translation.
Taiwan’s National Taxation Bureau of Taipei, Ministry of Finance, on 29 July 2026 issued guidance reminding profit-seeking enterprises that only realised foreign exchange gains and losses may be recognised for profit-seeking enterprise income tax purposes.
The guidance states that book differences arising solely from exchange rate adjustments do not constitute actual gains or losses and therefore may not be recognised when determining taxable income.
The Bureau said the clarification is based on Articles 29 and 98 of the Regulations Governing Assessment of Profit-seeking Enterprise Income Tax, which provide that foreign exchange gains and losses are recognised as income or deductible losses only when they have been realised.
Unrealised exchange differences not recognised
According to the Bureau, book differences created solely by exchange rate adjustments are not regarded as current-year income and cannot be claimed as deductible losses for tax purposes.
Although financial accounting rules require foreign currency deposits to be translated using the year-end exchange rate, with the resulting adjustments recorded as foreign exchange gains or losses in the financial statements, these amounts remain unrealised. Consequently, they must not be reported as foreign exchange gains or losses when filing a profit-seeking enterprise income tax return.
Bureau reminds businesses to comply
The Bureau urged profit-seeking enterprises to pay close attention to the applicable tax regulations when reporting foreign exchange gains and losses. It warned that incorrectly reporting unrealised exchange differences could result in adjustments to tax filings and additional tax assessments following a review by the tax authorities.
