Taiwan: OECD Action 13 recommendations now implemented
The Ministry of Finance in Taiwan announced on 13 November 2017 that it will adopt the recommendations of OECD’s Action 13 with respect to transfer pricing documentation. While Taiwan already has transfer pricing documentation requirements, adoption of the OECD’s three-tiered approach will certainly increase transfer pricing compliance for Taiwanese companies.
The three-tiered documentation approach comprises a local file (already a requirement), a master file and country-by-country reporting, although the compliance threshold (typically minimum group turnover) is yet to be announced.
The new documentation requirements will apply to fiscal years 2017 and later. Country-by-country reports will be due within 12 months of the end of the relevant fiscal year. When filing the company tax return, constituent entities of MNEs in Taiwan will need to declare details of its ultimate parent entity / surrogate parent entity responsible for submitting the group’s country-by-country report.
The master file will need to be PREPARED with the annual corporate tax return (May for a calendar year-end company) and SUBMITTED within 12 months of the end of the relevant fiscal year.
Taxpayers are required to prepare local transfer pricing files when annual revenues are equal to or greater than NTD 300 million, and where controlled transaction values are equal to or greater than NTD 200 million. If these thresholds are not met, other documents (not specifically defined) must be prepared and maintained that are sufficient to support intercompany pricing arrangements.
ACTION: Keep an eye out for those thresholds to be announced!