A. Taiwan, as a member of the global community, has committed itself to supporting and implementing international anti-avoidance tax measures despite the fact that Taiwan is neither a member of the Inclusive Framework on BEPS of the Organization for Economic Co-operation and Development (OECD), nor a party to the “Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting” (hereinafter referred to as MLI).  With respect to its implementation of the final reports of Actions on Base Erosion and Profit Shifting (BEPS) in relation to tax treaty measures, the majority of Taiwan’s 34 Avoidance of Double Taxation Agreements (hereinafter referred to as ADTAs) meet the BEPS Minimum Standards after performing self-assessments.
  

B. In order to show its support for BEPS tax treaty-related measures, Taiwan releases preliminary positions toward provisions under the MLI by referencing to the common practice of Jurisdictions who have participated in the MLI as follows:
 

1. The Minimum Standard on Action 6 (Preventing the Granting of Treaty Benefits in Inappropriate Circumstances) - Preamble
By reference to Paragraph 2, Article 6 (Purpose of a Covered Tax Agreement) of the MLI, Taiwan would like the following provision, which is presented in Paragraph 1 of this Article, to be included in its existing ADTAs in place of or in the absence of the preamble language:
“Intending to eliminate double taxation with respect to the taxes covered by this agreement without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in this agreement for the indirect benefit of residents of third jurisdictions).”
  

2. The Minimum Standard on Action 6 – Principal Purpose Test
By reference to Paragraph 2, Article 7 (Prevention of Treaty Abuse) of the MLI, Taiwan would like the following “Principal Purpose Test” provision, which is presented in Paragraph 1 of this Article, to apply in place of or in the absence of the corresponding provisions of its existing ADTAs:
“Notwithstanding any provisions of a Covered Tax Agreement, a benefit under the Covered Tax Agreement shall not be granted in respect of an item of income or capital if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of the Covered Tax Agreement.”
 

3. Action 7 (Preventing the Artificial Avoidance of Permanent Establishment Status) - Activities Carried on by an Enterprise which Would be Deemed not to Constitute a Permanent Establishment (PE)
By reference to Paragraphs 1 and 2, and Subparagraph a) of Paragraph 5 of Article 13 (Artificial Avoidance of Permanent Establishment Status through the Specific Activity Exemptions) of the MLI, Taiwan would like to choose the following provision concerning activities carried on by an enterprise which would be deemed not to constitute a PE, which is presented in Paragraph 2 (Option A) of this Article, to apply in place of the relevant parts of provisions of its existing ADTAs:
“Notwithstanding the provisions of a Covered Tax Agreement that define the term “permanent establishment”, the term “permanent establishment” shall be deemed not to include:
a. the activities specifically listed in the Covered Tax Agreement (prior to modification by this Convention) as activities deemed not to constitute a permanent establishment, whether or not that exception from permanent establishment status is contingent on the activity being of a preparatory or auxiliary character;
b. the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any activity not described in subparagraph a);
c. the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs a) and b),
provided that such activity or, in the case of subparagraph c), the overall activity of the fixed place of business, is of a preparatory or auxiliary character.”
 

4. The Minimum Standard on Action 14 (Making Dispute Resolution Mechanisms More Effective) - Mutual Agreement Procedure
a. By reference to Subparagraph a), Paragraph 5, Article 16 (Mutual Agreement Procedure) of the MLI, Taiwan would like to reserve the right for the first sentence of Paragraph 1 of this Article, which is related to “permits a person to present a case to the competent authority of either Contracting Jurisdiction,” not to apply in place of the corresponding provisions of its existing ADTAs.  However, Taiwan ensures that its ADTAs contain the following provision, and, pursuant to the OECD BEPS-related standards, the competent authority of Taiwan implements “a bilateral notification or consultation process with the competent authority of the other Contracting Jurisdiction for cases in which the competent authority to which the mutual agreement procedure case was presented does not consider the taxpayer’s objection to be justified:”
“Where a person considers that the actions of one or both of the Contracting Jurisdictions result or will result for him in taxation not in accordance with the provisions of this Covered Tax Agreement, he may, irrespective of the remedies provided by the domestic law of those Jurisdictions, present his case to the competent authority of the Contracting Jurisdiction of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting Jurisdiction of which he is a national.”

b. By reference to Item ii), Subparagraph a), Paragraph 4, Article 16 of the MLI, Taiwan would like the following provision, which is the second sentence of Paragraph 1 of this Article, to apply in place of provisions of its existing ADTAs that provide that a case must be presented within a specific time period that is shorter than three years from the first notification, or to apply in the absence of a provision of its existing ADTAs describing the time period within which such a case must be presented:
“The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Covered Tax Agreement.”

c. By reference to Item i), Subparagraph b), Paragraph 4, Article 16 of the MLI, Taiwan would like the following provision, which is the first sentence of Paragraph 2 of this Article, to apply in the absence of the corresponding provisions of its existing ADTAs:
“The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting Jurisdiction, with a view to the avoidance of taxation which is not in accordance with the Covered Tax Agreement.”

d. By reference to Item ii), Subparagraph b), Paragraph 4, Article 16 of the MLI, Taiwan would like the following provision, which is the second sentence of Paragraph 2 of this Article, to apply in the absence of the corresponding provisions of its existing ADTAs:
“Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting Jurisdictions.”

e. By reference to Item i), Subparagraph c), Paragraph 4, Article 16 of the MLI, Taiwan would like the following provision, which is the first sentence of Paragraph 3 of this Article, to apply in the absence of the corresponding provisions of its existing ADTAs:
“The competent authorities of the Contracting Jurisdictions shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Covered Tax Agreement.”

f. By reference to Item ii), Subparagraph c), Paragraph 4, Article 16 of the MLI, Taiwan would like the following provision, which is the second sentence of Paragraph 3 of this Article, to apply in the absence of the corresponding provisions of its existing ADTAs:
“They may also consult together for the elimination of double taxation in cases not provided for in the Covered Tax Agreement.”
 

5. Action 14 - Transfer Pricing Corresponding Adjustment
By reference to Paragraph 2 and Subparagraph a), Paragraph 3, Article 17 (Corresponding Adjustments) of the MLI, Taiwan would like to reserve the right for the following “transfer pricing corresponding adjustment” provision, which is presented in Paragraph 1 of this Article, not to apply to its existing ADTAs already containing such a provision; however, Taiwan would like the following provision to apply in the absence of the corresponding provisions of its existing ADTAs:
“Where a Contracting Jurisdiction includes in the profits of an enterprise of that Contracting Jurisdiction - and taxes accordingly - profits on which an enterprise of the other Contracting Jurisdiction has been charged to tax in that other Contracting Jurisdiction and the profits so included are profits which would have accrued to the enterprise of the first-mentioned Contracting Jurisdiction if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other Contracting Jurisdiction shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of the Covered Tax Agreement and the competent authorities of the Contracting Jurisdictions shall if necessary consult each other.”