萬國法律事務所

In view of the increasing number of transactions by local investors of overseas securities issued by local enterprises, the Ministry of Finance (MOF) has announced the principles of tax collection accordingly.

The Financial Supervisory Commission recently relaxed the previous bans and allowed local individuals and corporate investors to purchase overseas securities issued by local enterprises. Such securities include ECB (Euro-Dollar Convertible Bonds), GDR (Global Depository Receipts), and ADR (American Depository Receipts).

In accordance with this new channel for fund raising, the MOF announced the following principles of relevant tax collection:

1. Securities Transaction Tax: The transactions of such securities are exempted from the securities transaction tax.

2. Income Tax: The dividends derived from holding such securities will be considered income from sources in the Republic of China and thus subject to the income tax. In addition, the tax collection from the profits gained from selling such securities varies depending upon the nature of the owner of such profit. If the owner is an enterprise headquartered within the territory of the Republic of China, such profits will be deemed income from sources in the Republic of China and thus subject to the income tax. If the owner is an individual, then such profit will be otherwise categorized as overseas income and taxed pursuant to the minimum income tax rules, such that the individual will pay a minimum amount of income tax on the total overseas and local income in excess of NT$6 million.

3. Business tax: The fees charged by the local and foreign securities firms for dealing in such securities will be taxed respectively at the rate of 2% and 5% of such fees.