Taiwan’s Ministry of Finance has released a notice outlining the general conditions for declaring expenses, losses, and business-related expenses or losses on 4 November 2024.
The expenses or losses filed by profit-seeking enterprises should be attached with legal certificates and be related to their operation of business or subsidiary business in order to be declared as expenses or losses of profit-seeking enterprises.
The National Taxation Bureau of Kaohsiung, Ministry of Finance, stated that, according to Article 38 of the Income Tax Law and Article 62 of the Guidelines for Examination of Profit-Seeking Enterprise Income Tax, losses incurred not in the course of operation of business or subsidiary business, and family expenses shall not be considered as expense or loss. The legislative intent thereof is to distinguish between business expenses and family expenses, emphasising that expenses not necessary for the operation of profit-seeking enterprises must not be declared as such.
The Bureau further provided an example: While verifying Company A’s 2022 profit-seeking enterprise income tax declaration, the Bureau discovered that Company A had filed TWD 500,000 in expenses for clothing, quality goods, and kitchen implements from department stores as its operating expenses for the current year. The Bureau then requested that Company A explain the relevance of these expenses to its business operations or subsidiary activities. Since Company A could not reasonably explain this or provide relevant certification, the Bureau disallowed the expenses on the grounds that they were not related to the operation of business or subsidiary business.