Taiwan: Reminders related to claw back of retained earnings tax incentive, controlled foreign company rules

Reminders from the National Taxation Bureau

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november 12, 2025

The National Taxation Bureau recently issued the following tax-related reminders:

  • Under Article 23-3 of the Statute for Industrial Innovation, if an enterprise uses surplus earnings for qualifying investments and transfers or sells these assets within three years, the retained earnings tax incentive benefit will be clawed back.
  • When determining if a foreign enterprise in a low-tax jurisdiction is a controlled foreign company (CFC), direct or indirect holdings by related parties must be considered. According to Article 43-3 of the Income Tax Act, if a profit-seeking enterprise and its related parties hold 50% or more of the shares or have significant influence over a foreign enterprise in a low-tax jurisdiction, it constitutes a CFC.
     

For more information, contact a KPMG tax professional in Taiwan:

Vincent Lin | vincentlin@kpmg.com.tw

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