Regulations governing the special deduction of investment for surtax calculation under SII has been promulgated

Under Taiwan Income Tax Law, companies are subject to 5% surtax on undistributed earnings which is calculated based on the current year’s accounting earnings after deducting specific items allowed under the income tax laws such as dividend distributed and legal reserves. Companies are required to file their prior year surtax return together with their current year CIT(Corporate Income Tax) return. Prior to the introduction on tax incentive provided for surtax calculation under Article 23-3 of the SII (Statute for Industrial Innovation), the earnings used by companies for investment as opposed to declaring as dividend would be subject to surtax. To encourage investment by companies into its business operation, the Ministry of Finance (MOF), has introduced special tax incentive for surtax calculation under SII where the qualified actual investment made by companies can become one of the deduction items for surtax calculation.