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Place of Effective Management (PEM) Rules



Place of Effective Management (PEM) Rules

Legislative Purposes
Prevent a resident enterprise of the Republic of China(R.O.C.) from changing to a non-resident by incorporating and registering in the low-tax jurisdiction for  tax avoidance

Requirement of  identifying a PEM
I. The decision maker who makes significant decisions is a resident individual or a profit-seeking enterprise in the R.O.C., or the place where significant decisions are made is in the R.O.C.
II. Financial statements, records of accounting books, minutes of meetings are prepared or stored in the R.O.C.
III. Major business activities carried out in the R.O.C.

Any foreign enterprise that meets the three requirements is regarded as an enterprise with a place of effective management in the R.O.C.

Taxation Regulations
1. An enterprise with a place of effective management in the R.O.C. shall be deemed a resident enterprise in the R.O.C., and shall be subject to income tax and be obligated to withhold tax as well as other relevant tax matters
2. The above enterprise is applicable to the tax treaty
Enforcement Date
Will be determined by the Executive Yuan

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Last updated:2019-09-30