National Taxation Bureau of the Central Area, Ministry of Finance, stated that Article 38 of the Income Tax Act stipulates that losses incurred not in the course of operation of business or subsidiary business, as well as surcharges for delinquent reporting, non-reporting, and delinquent payment of tax as provided in various tax laws, and various fines shall not be considered as expense or loss. The aforementioned fines, according to Article 42-1 of the Enforcement Rules of the Income Tax Act, refer to fines imposed in accordance with various laws and regulations.

The Bureau explained with the following example: A company within its jurisdiction, after reviewing its 2023 Profit-seeking Enterprise Annual Income Tax Return, discovered that it had incurred a NT$450,000 fine under the Air Pollution Control Act for abnormal emissions, which was listed as deductible expense. According to the aforementioned provisions, fines cannot be listed as expense or loss. Therefore, the fine was completely disallowed, and the company was required to make additional payment of the deficit.

The Bureau would like to remind profit-seeking enterprises that fines imposed for violating various regulations, including those related to environmental pollution, food safety, and traffic violations, cannot be considered as expense or loss.

If you have any questions, please call the toll-free service number 0800-000321 for consultation, and we will do our best to serve you.

Contact person: Profit-seeking Enterprise Income Tax Division, Mr. Yu
Tel: (04)2305-1111 ext. 7131.