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Profit-Seeking Enterprise Controlled Foreign Company (CFC) Rules



Profit-Seeking Enterprise Controlled Foreign Company (CFC) Rules

Legislative Purposes
Prevent any enterprise from establishing a CFC in the low-tax jurisdiction and retaining earnings in the CFC for tax avoidance

Exemption Threshold
1. The CFC carries out substantial operating activities
2. The current year surplus earnings of the CFC are less than NTD 7 million

Avoidance of Double Taxation
1. When actually receiving the dividends or earnings, the amount shall be included in taxable income again
2. Foreign tax credits may be applicable
3. When an enterprise dispose of CFC shares and calculates capital gains, the  CFC’s investment income recognized previously can be deducted based on the disposal ratio of the shares

CFC Definition
For any profit-seeking enterprise and its related parties directly or indirectly holding 50% or more of shares or capital of a foreign enterprise registered in a low-tax jurisdiction, or having a significant influence on such a foreign enterprise

Taxation Investment Income
CFC investment income recognized by profit-seeking enterprises
= (The current year earnings of the CFC – The losses of past year assessed by tax authority)
* Direct holding ratio
* Holding period

Enforcement Date
Will be determined by the Executive Yuan

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Last updated:2019-09-30