Taiwan’s NTBNA, MOF has clarified that non-taxable investment income under Article 42 of the Income Tax Act must first be used to offset verified losses from the same year before any remaining loss can be carried forward and deducted against current-year profits under Article 39.
Taiwan’s Taxation Bureau of the Northern Area, Ministry of Finance (NTBNA, MOF), stated that, as stipulated in Article 39 of the Income Tax Act, when profit-seeking enterprises deduct the verified losses of each of the former ten years from the current year’s net profit, the investment income of each such year that is not included in taxable income under Article 42 of the same Act shall first be applied to offset the verified losses of that year, and any remaining loss may thereafter be deducted from the current year’s net profit.
The Bureau recently reviewed Company A’s 2022 profit-seeking enterprise income tax return, in which the company reported a TWD 10 million deduction for losses carried forward from the former ten years. Upon review, it was found that TWD 4 million of non-taxable investment income in the loss year (2019) should have been applied first to offset the losses. Accordingly, the Bureau reassessed the case, allowing a deductible loss of TWD 6 million and assessing additional tax.
According to Article 100-2 of the Income Tax Act, from the day following the statutory deadline for filing the final return through the date of payment of the additional tax, interest shall be calculated on a daily basis and collected together with the additional tax assessed, commencing at the fixed interest rate for one-year time deposits of the postal savings system in effect in 2023.
The Bureau would like to remind enterprises to comply with the relevant regulations when reporting deductions for losses from the former ten years and to correctly calculate the amount of such deductible losses, so as to avoid over-deduction resulting in additional tax assessments and interest charges.
This announcement was made on 29 May 2026.
