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Aliens Meeting Residency Rquirements in 2023 Shall Take Note of Individual CFC Rules

National Taxation Bureau of the Southern Area, Ministry of Finance (hereinafter “The Bureau”) indicated that any alien who stays in the R.O.C. for 183 days or more in taxable year 2023 is regarded as a resident in accordance with the Article 7 of the Income Tax Act. When filing 2023 individual income tax return from May 1 to May 31, 2024, he or she shall take note of Individual Controlled Foreign Company (CFC) Rules. 
The Bureau explained that Individual CFC Rules are enforced from January 1, 2023. If any member of an alien's reporting household directly or indirectly holds shares or capital of a foreign affiliated enterprise in a low-tax country or jurisdiction, it advised he or she obtain or download CFC related statements from National Taxation Bureaus or their official websites to check whether he or she should declare business income from CFC. If an alien files 2023 individual income tax return via “E-Filing and Payment of Individual Income Tax for Aliens,” with the need of filing CFC related statements, he or she shall fill out CFC related paper statements, file and submit them before May 31, 2024 to the jurisdictional National Taxation Bureau (National Taxation Bureau of Taipei, National Taxation Bureau of Kaohsiung, and the branch offices and service centers of National Taxation Bureau of the Northern Area, the Central Area, and the Southern Area respectively) in accordance with the residence address indicated on Alien Resident Certificate or Entry and Exit Permit.
The Bureau further explained how alien taxpayers determine whether  their members of reporting household are liable for Individual CFC Rules: 
1. Refer to “Statement of The Shareholding of An Individual and of His/Her Related Parties” to determine whether they shall disclose CFC information. If an individual and his/her related parties directly or indirectly hold 50% or more of the shares or capital of such a foreign affiliated enterprise, or had control over it, the individual shall file “Statement of The Shareholding of An Individual and of His/her Related Parties” (including the Attachment: The Organization Chart).
2. Check whether one of the following two conditions is met. If so, please fill out “Business Income Statement of a Controlled Foreign Company (CFC) for Individual” and submit with relevant proof documents.
(1) The individual, himself/herself, with his/her spouse or relatives within the second degree of kinship directly holds 10% or more of the shares or capital of such a CFC on December 31, 2023.
(2) The above-mentioned sum is below 10% of the shares or capital; however, the CFC has current-year losses that would be deducted in the following years. 
The Bureau would like to remind taxpayers that individual business income from CFC is one item of aggregated overseas income included in the basic income. In the case that per filing unit of individual aggregated overseas income is greater than or equal to NT$1,000,000 with adding business income from CFC, the total amount of such aggregated overseas income shall be included in the amount of basic income and declared in the annual income basic tax return. In addition, 2023 income basic tax shall be paid on the condition that the total amount of 2023 basic income, including net taxable income, aggregated overseas income, and other items (such as life and annuity insurance payments, income derived from transactions of securities, non-cash donations or contributions deducted from the gross consolidated income, and the amount of income or deduction entitled to reduction, exemption, or deduction announced by the Ministry of Finance), exceeds NT$6,700,000. 

Press Release Contact: Ms. Lin
Individual Income, Estate and Gift Tax Division
TEL: 06-2223111 ext.8065

Last updated:2024-05-22