Taiwan Releases New Rulings for Transfer Pricing Adjustments and Exemptions

There are two recent transfer pricing tax rulings released by the Ministry of Finance (“MoF”) in relation to one-time transfer pricing adjustments and exemption thresholds for filing the Master File and Country-by-Country (“CbC”) report in Taiwan.

Tax Ruling for One-time Transfer Pricing Adjustment

The MoF issued tax ruling Tai Tsai Shuei 1080462900 on November 15, 2019 in relation to one-time transfer pricing adjustments. Effective from fiscal year 2020, any entity with related party transactions which is making one-time transfer pricing adjustments before closing the accounts would need to satisfy the following requirements:

  1. The related parties have agreed on the terms and pricing of the related party transaction (prior to the related party transactions taking place), and the relevant adjustments are made in the relevant account receivables and payables; and
  2. The other related parties make corresponding adjustments in their accounts.

The ruling further explains the corresponding adjustments in customs, business tax, commodity tax, and corporate income tax which should be made. In particular, it explains the actions and lists the supporting documentation required in the corresponding adjustments. The MoF note that for the import of goods, if the Taiwan taxpayer fails to provide supporting documents on time, Taiwan Customs may determine the taxable value of the imported goods at its discretion.

The tax ruling in Chinese can be found here.

Tax Ruling for Exemption Thresholds for the Submission of Master File and CbC Report

Subsequently, the MoF have issued tax ruling Tai Tsai Shuei 10804651540 on December 10, 2019 to clarify the thresholds for the submission of Master File and CBC report. In particular, this ruling clarifies the CbC reporting thresholds mentioned in the previous tax ruling Tai Tsai Shuei10604700690 in local currency, by converting Euro 750 million to NTD 27 billion. This provides Taiwan taxpayers clarity for the exemption threshold of the CBC report.

The English press release can be found here.

Read Transfer Pricing Times – December 2019

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