Newsletter
RECORD KEEPING AND INCOME/EXPENSE RECOGNITION FOR FOREIGN HEAD OFFICE PROVIDING SERVICES TO CUSTOMERS IN TAIWAN
In 1987, the Ministry of Finance (MOF) announced that remuneration obtained by the foreign head office of an enterprise for services rendered directly to local customers within the ROC is income from ROC sources, on which profit-seeking enterprise income tax should be paid by the enterprise's branch in Taiwan.
The MOF in an announcement dated 20 January 1999 clarified further that to clearly calculate income obtained by an enterprise's foreign head office for services rendered in the ROC and income obtained by branch through local operations, and to avoid commingling the costs and expenses of the head office and the branch, the ROC branch should keep separate accounts of the revenues, costs, expenses, and calculate corresponding income of the head office and the local branch. The foreign head office and the branch shall jointly file their income tax return in accordance with Article 71 of the Income Tax Law and pay profit-seeking income tax at the prescribed progressive tax rate on the combined income.