Taiwan Legislature Finance Committee statement concerning Taiwan joining the CRS

June 14, 2017 to Addendums to Articles 5-1 and 46-1 of the Tax Collection Act were promulgated on enhance information transparency and meet the new international standard



In order to coordinate with the rising new international standard on information transparency and to avoid being categorized as a “non-cooperative jurisdiction,” it is necessary for Taiwan to complete the legal basis to implement the “Standard for Automatic Exchange of Financial Account Information in Tax Matters.” The purposes of these amendments are to authorize the Ministry of Finance to conclude a convention or an agreement to implement exchange of information (including financial account information) in conformity with the new international standard on information transparency, and provide administrative assistance to enhance tax cooperation. The main contents of the amendments are as follow:
  1. The Ministry of Finance may, based on the principle of reciprocity, enter into a convention or an agreement of information exchange for the use of tax purposes and provision of other mutual tax assistance with a foreign government or an international organization, and put it into force after obtaining the approval of the Executive Yuan and completing the formality of exchange of diplomatic instruments with the said foreign entity. Implementing the aforesaid convention or agreement shall be on a reciprocal basis. Five kinds of situations in which exchange of information shall not be conducted are stipulated.
  2. A concluded convention or an agreement allows exchanging information about the property, income, business, tax payment, and financial accounts or other tax information on request, automatically, and spontaneously. Relevant agencies, institutions, organizations, enterprises, or individuals who maintain required tax information are obliged to provide it;
  3. information related to financial accounts which shall be exercised due diligence or other reviewing procedures, can only be provided after completing such reviewing. Exchange of information is exempted from confidentiality clauses set forth in taxation and financial Acts.
  4. The Ministry of Finance, consulting with the Financial Supervisory Commission and other related agencies is authorized to draw up and promulgate rules and regulations on the scope of exchange of information, the measures of implementation, the presentation of a request, the collection, and the content of information, the time limit and measures for providing information, the standard for due diligence and other reviewing processes, and the measures governing procedures for providing information to another contracting partner and other related issues.
  5. Fines shall be imposed on agencies, institutions, organizations, enterprises, or individuals who avoid, impede, refuse to be investigated, or decline to answer relevant questions, or refuse to submit relevant information and documents required, and those who fail to exercise due diligence or other reviewing processes on financial accounts regulated.
The Ministry of Finance stressed that the government has been working on the establishment of an information exchange mechanism for tax purposes in line with the new international standard on information transparency in order to protect tax revenue, maintain tax fairness and fulfill international obligations. The Ministry of Finance will actively conclude conventions or agreements related to exchange of information; consult the Financial Supervisory Commission and other related agencies as well as associations of banks, securities, insurance and trusts to draw up regulations in accordance with the Common Reporting Standard developed by the Organization for Economic Co-operation and Development; plan the procedures for exchange of information in practice; and establish information systems to facilitate future implementation.
June 8th, 2016 Legislative Yuan Completed Preliminary Review of Draft Bill regarding Taiwan CFC and PEM rules. The Finance Committee of the Legislative Yuan completed preliminary review of draft amendments (i.e. Article 43-3 and Article 43-4) to the Income Tax Act, which incorporates regulations concerning Controlled Foreign Company (“CFC”) and Place of Effective Management (“PEM”), respectively.

According to news reports, the draft amendments are expected to come into force in 2018 at the earliest, under the premise that the China-Taiwan Cross-Strait Tax Agreement is effectuated, the Common Reporting Standard is executed, and relevant proposed bylaws have been adequately planned and properly advocated.
Legislators approve amendments to deal with firm tax evasion TAIPEI, Taiwan -- In an attempt to curb tax evasion by corporations, the Legislature's Finance Committee yesterday made amendments to the Income Tax Act, but the new regulations won't be implemented just yet, Finance Minister Sheu Yu-jer said.

To lessen the new regulations' adverse impact on companies, three conditions have to be met beforehand, Yu said.

They are the implementation of the cross-strait taxation agreement; the adoption of the Common Reporting Standard (CRS), an information standard for the automatic exchange of information developed in the context of the Organisation for Economic Co-operation and Development; and lastly, government communication with local companies about the new rules to alleviate concerns they might have.
Taiwan has a strong network of Double Taxation Agreements

Taiwan has 16 comprehensive DTAs
Tax Treaty Policy.
The ROC's general policy toward tax treaties is to avoid double taxation, prevent fiscal evasion and strengthen substantive relations. The tax treaties that the ROC has entered into follow the OECD model and take into consideration matters relating to the political and fiscal status, economics, and trade of the mutual parties.

Comprehensive income tax treaties which cover all income flows: Australia, Belgium, Denmark, Gambia, Indonesia, Macedonia, Malaysia, the Netherlands, New Zealand, Senegal, Singapore, South Africa, Swaziland, Sweden, Vietnam and UK.
Tax Justice Network shines a light on Taiwan's offshore banking units Taiwan, the unnoticed Asian tax haven "We now have a couple of questions for the OECD, the global body that has taken most responsibility for creating international financial transparency.

With all these red flags, why is Taiwan not on the 131-member list for its Global Forum, the body that carries out peer reviews and puts pressure on countries to shape up, transparency-wise?

This may well be China’s influence, seeking to keep Taiwan out of all international fora, as it has done for this “splittist” state for many years, in many different ways. This state of affairs may also suit powerful people in the Chinese leadership, for more personal financial reasons.

Can we look forward to seeing Taiwan subjected to the Global Forum’s Peer Review Process? And if not, could we please have an explanation for why not?"