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Taiwan: Guidance for taxpayers making a one-time transfer pricing adjustment

Taiwan: One-time transfer pricing adjustment

The Ministry of Finance issued guidance—ruling no. 10804629000 (15 November 2019)—addressing situations when multinational enterprises (MNEs) make a one-time transfer pricing adjustment to achieve an arm’s length result.


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Such one-time transfer pricing adjustments may be needed when unexpected market conditions cause actual transaction results to deviate from targeted results of the transfer pricing policy.

Beginning with the 2020 fiscal year, a taxpayer (company) that conducts controlled transactions and makes a one-time transfer pricing adjustment prior to closing the accounts for that fiscal year needs to satisfy certain requirements, such as:

  • Prior to conducting controlled transactions, the transacting parties must have in place a written agreement containing the terms of the transactions and all factors affecting the transaction price. Furthermore, the relevant account receivables and payables resulted from the adjustment based on the agreement must also be “booked” in the accounts.
  • The counter-parties involved in the controlled transaction also must make a corresponding adjustment.

A taxpayer that makes a one-time transfer pricing adjustment must pay all relevant taxes and levies based on the adjusted transaction price.

The guidance outlines specific action steps for taxpayers to take if the transaction involves tangible goods imported into Taiwan, as well as for other types of transactions, and lists the documentation required to be provided with the income tax return. If a taxpayer fails to satisfy these requirements, Taiwan Customs can assess the dutiable value using its sole discretion.

KPMG observation

The Ministry of Finance guidance on making a one-time transfer pricing adjustment allows MNEs to make appropriate adjustments prior to the end of fiscal year. However, to qualify for this treatment, the taxpayer must determine that it has complied with various tax and customs requirements during different phases of the transaction.

Read a November 2019 report [PDF 494 KB] prepared by the KPMG member firm in Taiwan

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