Taiwan: Rules allowing one-time transfer pricing adjustment

The rules allow the one-time transfer pricing adjustment before the year-end for companies engaged in certain controlled transactions.

Guidance from the Ministry of Finance

Guidance from the Ministry of Finance provides rules allowing a one-time transfer pricing adjustment.

These rules allow the one-time transfer pricing adjustment before the year-end for companies engaged in controlled transactions when there are non-controllable market conditions or environmental factors and when the companies have met certain relevant requirements and paid relevant taxes and fees.

The concept behind the one-time adjustment is to allow companies to reflect the economic substance of transactions in a timely manner and to show company profits are determined in accordance with arm’s length transfer pricing principle and reflect a reasonable tax burden.


There is certain information that must be disclosed during filing of annual tax return. The format of FY 2020 annual tax return form now reflects new areas for companies that take advantage of the one-time transfer pricing adjustment. Taxpayers must disclose certain relevant information about the parties engaged in the controlled transactions—such as the transaction type, the transaction price before and after the one-time adjustment, the total amount of adjustment, and the relevant accounts regarding the adjustment.

Taxpayers must also declare the reasons of making the adjustment, and before conducting controlled transactions, a written agreement (with transaction terms and factors affecting price) must be in place. The counterparties involved in these controlled transactions also must perform the corresponding adjustment simultaneously.

Lastly, all relevant taxes and fees must be paid including customs duties, value added tax, commodity tax, and income tax (including withholding tax).

KPMG observation

Implementation of the rules for the one-time transfer pricing adjustment provides another option for companies that are unable to reflect their transfer prices in a timely manner (due for example to fluctuations in the market or environmental factors) to reasonably allocate profits between related companies and to show that the related parties’ profits are determined in accordance with the arm’s length transfer pricing principle.

Companies that perform the one-time transfer pricing adjustment are not relieved of a possible transfer pricing audit. In the case of a tax investigation and any cases of non-conformity of arm’s length principle, the tax authority will still make a transfer pricing assessment according to the arm’s length principle and perform relevant tax adjustments.

Taxes that have been adjusted and paid under the one-time transfer pricing adjustment cannot be applied to the customs authority or competent authority for subsequent correction. Hence, companies that elect for the one-time transfer pricing adjustment need to evaluate the costs and benefits of performing such an adjustment and must consider the arm’s length profit allocation to understand factors that may affect the transfer price between the parties to controlled transactions and prepare reasonable supporting documents regarding the adjustments.

Read a May 2021 report [PDF 236 KB] prepared by the KPMG member firm in Taiwan



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