To provide clear guidance for MNEs to conduct one-time TP adjustment, MOF announced ruling no. 10804629000 on November 15, 2019.
MNEs often face unexpected market conditions causing the actual transaction result to deviate from targeted result of the TP policy. Hence, to achieve an arm’s-length result, MNEs often face the need to make one-time TP adjustment.
To provide clear guidance for MNEs to conduct one-time TP adjustment, MOF announced ruling no. 10804629000 on November 15, 2019. Relevant highlights are as below:
Starting from 2020 fiscal year, company that conduct controlled transactions and make one-time TP adjustment prior to closing the accounts of that fiscal year, should meet the following criteria and pay the relevant tax and levies:
Company that make one-time TP adjustment based on abovementioned criteria should pay relevant tax and levies based on the adjusted transaction price according to the following rules:
For tangible goods imported into Taiwan
To assist the Customs trace the imported goods that may be subject to TP adjustment, company should follow below compliance rules:
For other types of transactions
In regards to transactions other than imported goods, company should follow below compliance rules:
When the company files income tax return, it should disclose relevant information of the controlled transaction, and provide the following to the governing tax authority:
The company should also explain the reasons for such price adjustment and actual adjusted result.
Ellen Ting, Partner
Howard Lu, Associate Director
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