萬國法律事務所

Amortization of goodwill has been an ongoing problem in Taiwan’s mergers and acquisitions market. The primary issue has to do with the value of the goodwill in question. The procedures to determine the value of the goodwill and court precedents relating to it create uncertainties to the transactions, which leads to additional costs and litigations.

There are two levels to the administrative proceedings in Taiwan. However, only the first level proceeding looks into the facts of the case. In other words, if the evaluation report used in the first proceeding is incorrect, during the appeal, the appellant cannot submit any new evidence to rebut the incorrect evaluation report.

The Joint Conference of the Supreme Administrative Court found that the taxpayer has the obligation to demonstrate the value of the good will; however, results in practice have been inconsistent. Therefore, the Ministry of Finance has ordered the Tax Administration to come up with a standard to evaluate the value of goodwill through deliberation; in order to minimize conflicts. However, as of today, the rulings from different courts at the Supreme Administrative Court are still inconsistent.

Unless this uncertainty can be solved, the additional costs and burdens to mergers and acquisitions deals will persist.