Taiwan's National Taxation Bureau of Taipei has reminded profit-seeking enterprises that only realised foreign exchange gains and losses may be recognised for profit-seeking enterprise income tax purposes, while unrealised exchange rate adjustments remain non-deductible and non-taxable.
Taiwan’s National Taxation Bureau of Taipei, Ministry of Finance has clarified that profit-seeking enterprises may recognise only realised foreign exchange gains and losses for profit-seeking enterprise income tax purposes, while book differences arising solely from exchange rate adjustments do not constitute actual gains or losses.
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.
According to the Bureau, exchange differences resulting solely from year-end exchange rate adjustments are regarded as unrealised. Although these adjustments must be recorded in financial statements under accounting rules, they are not recognised as current-year taxable income or deductible losses for income tax purposes.
The Bureau noted that foreign currency deposits are required to be translated using the year-end exchange rate for financial accounting purposes, with any resulting adjustments recorded as foreign exchange gains or losses. However, because these amounts remain unrealised, they must not be reported as foreign exchange gains or losses when filing a profit-seeking enterprise income tax return.
The Bureau reminded profit-seeking enterprises to ensure that foreign exchange gains and losses reported in their tax returns comply with the relevant tax regulations. It said failure to follow the rules could result in tax adjustments and additional tax assessments.
This announcement was made on 29 July 2026.
