The National Taxation Bureau of the Southern Area, Ministry of Finance (hereinafter “The Bureau”) would like to remind branch offices within the territory of the Republic of China of foreign companies that have been dissolved to make their current final reports on total business income and income earned from liquidation within the time limit stipulated in Article 75 of the Income Tax Act.
The Bureau stated that, subject to Article 379 of the Company Act, when the foreign company has been dissolved, the competent authority shall nullify the branch office registration of that foreign company in the territory of the Republic of China. Also, according to Article 380 of the Company Act, the foreign company which cancels or nullifies all of its branch offices in the territory of the Republic of China shall complete liquidation of its business within the territory of the Republic of China or rights and obligations incurred by its branch offices. Any outstanding obligation shall still be discharged by such foreign company. The aforesaid liquidation shall be undertaken by the responsible person of the foreign company within the territory of the Republic of China or the managerial officer of its branch office.
Therefore, the branch office whose registration was nullified due to the dissolution of the foreign company shall wind up all pending business, collect all outstanding debts, and pay off all claims. Also, the branch office shall make its current final report and liquidation income report within the time limit in accordance with Article 75 of the Income Tax Act.
The Bureau explained that the branch office of the foreign company within the territory of the Republic of China is not required to distribute its earnings on completion of the liquidation because its profit derived from the territory of the Republic of China is considered part of the foreign company's profit, included in taxable income, and liable to pay profit-seeking enterprise income tax according to Paragraph 3, Article 3 of the Income Tax Act. Hence, there is no issue for the branch office regarding earnings distribution after completing the liquidation process.
The Bureau further reminded foreign companies that, if they have been dissolved, their branch offices within the territory of the Republic of China should note that their current final report and liquidation income report shall be made within the time limit in accordance with the regulations to avoid any detrimental impact on their interests.
Press Release Contact: Ms. Ou
Profit-seeking Enterprise Income Tax Division
TEL: 06-2223111 ext.8034