Taiwan: Guidance on CFC rules and business tax on cross-border electronic services
Recent tax guidance in Taiwan
The National Taxation Bureau of the Northern Area on July 28, 2026, reminded profit-seeking enterprises that Taiwan’s controlled foreign company (CFC) rules require CFC income to be included in taxable income unless a qualifying exemption applies, including for entities with substantial operating activities or annual earnings of NT$7 million or less. A CFC is considered to have substantial operating activities only if it maintains a fixed place of business and local employees conducting actual business activities and derives less than 10% of its income from passive sources.
In addition, the National Taxation Bureau of the Southern Area, Ministry of Finance, on August 4, 2026, clarified that profit-seeking enterprises may elect to defer recognition of unrealized gains and losses from financial instruments held by CFCs measured at fair value through profit or loss (FVPL), with recognition deferred until disposal or reclassification. The election must be applied consistently to all directly held CFCs and cannot be changed once selected, and taxpayers must maintain and provide the required supporting documentation to qualify for the deferral treatment.
Finally, the National Taxation Bureau of the Central Area reminded domestic businesses, organizations, and institutions that they must declare and pay business tax when purchasing cross-border electronic services from foreign suppliers. Businesses using the services solely for taxable activities may be exempt from the tax but must still report the payments, while dual-status entities must calculate tax under the applicable rules.
For more information, contact a KPMG tax professional in Taiwan:
Vincent Lin | vincentlin@kpmg.com.tw