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The Ministry of Finance amended Article 10-1 of the “Directions Governing Application of Mutual Agreement Procedures of Agreements for the Avoidance of Double Taxation with Respect to Taxes on Income”

         The Ministry of Finance stated that, Article 10-1 of the “Directions Governing Application of Mutual Agreement Procedures of Agreements for the Avoidance of Double Taxation with Respect to Taxes on Income” (hereinafter referred to as “MAP Directions”) was amended and promulgated on November 25, 2020. The amendment stipulates that, when  an applicant of a cross-border bilateral or multilateral Advance Pricing Arrangement (hereinafter referred to as BAPA) changes its business address in the taxation registration before the signing of the BAPA, leading to the years of the BAPA covered falling under different tax collection authorities-in-charge, the authorized tax collection authority conducting the Mutual Agreement Procedures (MAP) with a tax treaty partner should be the one with which the applicant files its profit-seeking enterprise income tax return for the first fiscal year covered by the BAPA. The applicant should notify the competent authority (Department of International Fiscal Affairs of the Ministry) within 14 days from the date of approval of the changed registration, as the competent authority has to examine whether changing the authorization is necessary.

The Ministry of Finance gave an example that, Company A applied for a BAPA for the period from January 1, 2018 to December 31, 2022 according to Article 10 of the MAP Directions, and at that time its business address marked in the tax registration was located in Taipei City. After the application for the BAPA being approved as compliant with the relevant regulations, the competent authority authorized the National Taxation Bureau of Taipei to conduct the MAP with the tax treaty partner. Assuming that Company A changed its business address in the tax registration to Kaohsiung City in 2019, it should notify the competent authority within 14 days from the date of approval of the change in registration; two possible circumstances are as follows:

(1) If Company A received the approval of the changed registration in March 2019, it should file its profit-seeking enterprise income tax return for the year 2018 with the National Taxation Bureau of Kaohsiung in May 2019. The competent authority should change the authorization to the National Taxation Bureau of Kaohsiung to conduct the MAP.

(2) If Company A received the approval of the changed registration in September 2019, it still filed its profit-seeking enterprise income tax return for the year 2018 with the National Taxation Bureau of Taipei, and the National Taxation Bureau of Taipei had been authorized to carry out the MAP; therefore, no authorization of change is needed.

The Ministry of Finance expressed that, considering a BAPA usually covers several fiscal years, the applicant might change its tax collection authority-in-charge during the consultation process of the BAPA; therefore, establishing clear principles of authorization is necessary to improve the certainty of administrative procedures, facilitate the efficiency of MAP, and protect the applicant’s rights. For more information, please browse relevant documents (including regulations, application forms, and flow charts) published on the website of the Ministry of Finance (path: Ministry of Finance > Service > International Fiscal Affairs > Mutual Agreement Procedures (MAP)).

Contact person: Ms. Yu-Hsuan Wang, Section Chief. 

Contact Number: (02)2322-8183

Issued:Dept. of International Fiscal Affairs Release date:2020-11-25 Last updated:2020-11-26 Click times:683
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