2017-06-05
MINISTRY OF FINANCE is planning to promulgate of "Regulations Governing Application of the Place of Effective Management"
Recently, in order to build sufficient Anti-Tax Avoidance system, the Ministry of Finance is planning to promulgate the "Regulations Governing Application of the Place of Effective Management" (PEM), which will supplement the Income Tax Act §43-4 to regulate that the foreign profitable enterprises whose PEM in the territory of the Republic of China are deemed to reside in the territory of the Republic of China, and those enterprises shall be imposed income tax subject to the Income Tax Act and the agreement signed between the Republic of China and other country.
The Ministry of Finance indicates that the definition of PEM in the territory shall meets the following three requirements simultaneously: "the major decision maker or the place which making those decisions is in the territory", "the place which making or storing financial statements, accounting books and meeting minute is in the territory" and "implement the main business actually in the territory".
Further, the Ministry of Finance indicates that the specific date of those revisions to be implemented shall be decided by Executive Yuan subject to Income Tax Act §126.
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