萬國法律事務所

Since the implementation of listing employee bonus shares as expenditure in 2008, companies in Taiwan that issues bonus shares to employee has decreased as expenditure for issuing employee bonus shares must be listed as the company’s expense on its financial statement rather than profit distribution. In addition, lapse of Statute for Upgrading Industries in 2010 further deteriorated industries’ motivation to issue employee bonus shares as the taxable income derived from employee bonus shares must be calculated based on subject shares’ market price rather than par value.

Recently, it is reported by press that Ministry of Economic Affairs may initiate review on the current mechanism of employee bonus shares and relevant tax application in order to identify a method that assists industries with upgrades, and attract domestic talent but without materially impact on taxation. A potential approach may be amend the Act for Industrial Innovation (i.e., the law that replaces Statute for Upgrading Industries in 2010) to have taxable income derived from employee bonus shares be calculated based on subject shares’ par value. However, it has been reported that Ministry of finance disagreed with such proposition, as employee bonus shares are identical to any other remuneration in nature; therefore, it should not be treated differently.