The National Taxation Bureau of the Northern Area (NTBNA), MOF, stated that for profit-seeking enterprises reporting travel expenses, in accordance with Article 74 of the Income Tax Act, they should present a business trip report and related documents detailing the places visited each day, the subjects of the visit and the contents, etc., which are sufficient to prove that the expenses are related to business.
The Bureau further explained that, in accordance with the principle of matching of costs with revenues, in the calculation of income from profit-making enterprises under the Income Tax Law, the recognition of operating expenses is not the only fact of expenses, but also that the expenses are reasonable and necessary for the profit-making enterprise. That is, it must be quite related to the business of the operating enterprise.
As an example, the Bureau stated that when checking the 2019 profit-seeking enterprise income tax settlement and declaration case of Company A within its jurisdiction, it found that the general manager Mr. Q’s travel expenses to Japan, Singapore, France, and other places totaled NT$3 million, and Company A provided the application for travel expenses, business trip report, air tickets, boarding passes, accommodation voucher, and travel agency's collection and payment receipts and other expenditure vouchers, but the business trip report only briefly states that the itinerary is for business expansion, and does not detail the day-to-day locations, interview subjects, and related documents to prove that the expenses are related to business. Therefore, the Bureau has reduced travel expenses by NT$3 million in accordance with regulations, and approved a supplementary tax of NT$600,000.
The Bureau specially reminds profit-seeking enterprises that, when reporting travel expenses, they should comply with the relevant laws and regulations to avoid adjustment and additional taxes. If there are any questions, please visit the website of NTBNA (https://www.ntbna.gov.tw) to inquire the relevant laws or call the toll-free service number 0800-000321. We will provide consulting services wholeheartedly.