Taiwan’s Northern District National Taxation Bureau has confirmed that income earned by Taiwan-based profit-seeking enterprises from investments in foreign financial products is classified as overseas income and must be combined with domestic earnings when calculating business income tax.
Taiwan’s Northern District National Taxation Bureau of the Ministry of Finance clarified today, 12 March 2026, that income derived by profit-seeking enterprises from investments in foreign financial products constitutes overseas income. Such income does not fall within the scope of withholding tax but is classified as overseas income. In accordance with Article 3, Paragraph 2 of the Income Tax Act, it must be combined with domestic income and subject to business income tax.
The Bureau explained that profit-seeking enterprises with their head offices located within the Republic of China are required to include all income earned both domestically and abroad when calculating business income tax. Therefore, overseas income from investments in foreign financial products—including overseas profit income (such as dividends distributed by offshore funds), overseas interest income (such as distributions from offshore bond funds), and overseas property transaction income (such as gains from disposing of offshore funds)—must all be incorporated into the annual taxable income of the enterprise.
For example, Company A purchased an offshore bond fund in 2024. Due to an oversight by its accounting staff, the company failed to carefully review the detailed overseas income statement issued by the financial institution for that year. As a result, it omitted TWD 500,000 in overseas interest income from its tax return, leading to underreporting. Upon investigation, the Bureau imposed an additional tax of TWD 100,000 along with a penalty.
The Bureau reminded taxpayers that overseas income is not included in the income data provided by the tax authorities for inquiry purposes. Enterprises must ensure that such income is incorporated into their business income tax filings to avoid back taxes and penalties.
If an enterprise discovers on its own that overseas income has been underreported, it may, before being reported or investigated by the tax authorities, voluntarily file a supplementary declaration and pay the omitted tax in accordance with Article 48-1 of the Tax Collection Act. This protects the enterprise’s rights and exempts it from penalties.
