Taiwan: Updates to Transfer Pricing Documentation Requirements
The Amendment of Transfer Pricing Audit Rules was published on November 13, 2017, by the Taiwan Ministry of Finance. This confirmed Taiwan’s implementation of the OECD suggestedBEPS Action 13, by adopting all three aspects of the recommended documentation: the country-by-country (CbC) report, Master File and Local File.
1. CbC Report
The CbC report is required for fiscal years beginning on or after January 1, 2017, for Taiwanese taxpayers and Taiwanese permanent establishments (PE) of foreign corporations which are members of a multinational group with total consolidated revenue in the prior fiscal year exceeding the stipulated threshold (not yet determined). The CbC report must be provided to the tax authority by the Taiwanese taxpayer (in the case of multinational groups headquartered in Taiwan) no later than December 31 the following year. For fiscal year 2017, the deadline for submission of CbC reporting is December 31, 2018.
2. Preparation of Master File
A Master File is required for a multinational profit-seeking enterprise (MNE) with total consolidated revenue exceeding the stipulated threshold. The Taiwanese taxpayer must submit the Master File to the tax authority by December 31 after the end of each fiscal year. A one month extension may be granted subject to the approval of the tax authority. The required content of the Master File is specified in Article 21-1 of the Amendment of Transfer Pricing Audit Rulesand is largely consistent with OECD recommendations.
3. Preparation of Local File
The Local File is also required for a MNE with total consolidated revenue exceeding the stipulated threshold (not yet determined). The Local File must be prepared by May 31 after the end of each fiscal year (i.e. for fiscal year 2017, the deadline for submission of Local File is May 31, 2018). The required contents for the Local File are largely consistent with OECD recommendations, but there are a few additional requirements (Article 22, revised), including:
- A description of the individuals to whom local management reports and where the principal office is located
- All material intercompany agreements concluded by the local entity
- A copy of existing unilateral APAs and other advance tax rulings to allocate the income
If requested by the tax authority, the Local File must then be submitted within one month from the date of request.