Taiwan’s Southern Area National Taxation Bureau has stated that income from completed contracted construction works must be fully recognised as operating revenue upon completion, regardless of payment receipt, ahead of the 2025 profit-seeking enterprise income tax filing season.
Taiwan’s Southern Area National Taxation Bureau of the Ministry of Finance has stated that income from completed contracted construction works must be reported as operating revenue in full upon completion, regardless of whether payment has been received, ahead of the 2025 profit-seeking enterprise income tax filing season.
The Bureau explained that if a business has completed contracted construction work during the accounting period, the full contract price must be recognised as operating revenue once the work is completed. The timing of cash receipt shall not be used as the basis for determining the year in which operating income is recognised.
In accordance with Article 22(1) of the Income Tax Act, a business entity shall, in principle, adopt the accrual basis of accounting. Furthermore, Article 24(4) of the Standards for Assessing Profit-Seeking Enterprise Income Tax Audits stipulates that the completion of contracted construction work refers to actual completion. The completion date shall be determined based on the date on which the completed project is delivered to and accepted by the commissioning party. If this date cannot be ascertained, then for the construction of buildings, the completion date shall be the date on which the competent authority issues the occupancy permit. For non-building construction projects, the completion date shall be the date of acceptance by the commissioning party. Where a project has been completed but part of the payment has not yet been received due to a delay by the contracting party, such amounts constitute accounts receivable and must be recognised as income.
The Bureau cited an example involving Company A, a construction business within its jurisdiction, which undertook a renovation project for Agency A in December 2022. In its 2023 profit-seeking enterprise income tax return, the project was reported as work in progress. However, upon review of the contract and completion acceptance documents, the Bureau found that the project was completed in October 2023 and accepted by Agency A. Although the final payment of over TWD 2 million was received in 2024, Company A was required, in accordance with the above regulations, to include this amount in its 2023 operating revenue. As Company A failed to report this final payment, it was subject to additional tax assessment and penalties.
The Bureau reminded businesses that for contracted construction work, once the project is completed, all related income must be reported as operating revenue in the year of completion when filing profit-seeking enterprise income tax returns, regardless of whether payment has been received, in order to avoid underreporting and subsequent tax adjustments and penalties.
This announcement was made on 8 April 2026.
