Taiwan: Proposed amendments to local transfer pricing rules

Taiwan’s Ministry of Finance has proposed amendments to the nation’s transfer pricing guidelines to bring them in line with the international transfer pricing standard. The new rules are expected to take effect by the end of 2020. The key changes include:

• Revision of the definition of intangibles to be in line with the OECD guidelines
• Considering necessary factors of economic substance when transactions are evaluated
• Updating the risk assessment procedure and management of risk
• Assessing and adjusting the compensation based on the level of risk controlled
• Determining the relevant factors when selecting the most appropriate transfer pricing method
• Considering the functions, assets and risks involved in development, enhancement, maintenance, protection and exploration when analyzing the degree of comparability
• Introducing a discounted cash flow method