Controlled Foreign Company (CFC)
Starting from 2023, if a profit-seeking enterprise and its related parties directly or indirectly hold more than 50% of the shares or capital of a related enterprise located in a low-tax jurisdiction outside the Republic of China, or have significant influence over such related enterprise, the foreign related enterprise will be regarded as a Controlled Foreign Company (CFC).
If the CFC does not meet the exemption criteria, the profit-seeking enterprise must recognize the CFC’s investment income in accordance with Article 43-3 of the Income Tax Act and include it in the taxable income for the current year.
Services
Calculation and Offset of Profits and Losses
- CFC Investment Income =
(Current Year Earnings of the CFC – Legal Earnings Reserve or Restricted Distribution Items – Approved Losses from Previous Years)
× Direct Shareholding Ratio × Holding Period - Individual CFC’s Current Year Losses:
Losses incurred by a CFC can be carried forward and offset against future earnings of the same CFC within 10 years, starting from the year following the loss. - To carry forward previous years’ losses of a CFC for offset within 10 years, a profit-seeking enterprise or individual shareholder must submit the following documents at the time of income tax filing:
- Diagram of related-party structure
- CFC financial statements (a 6-month extension may be requested with justification)
- Schedule of CFC loss carryforwards over the past 10 years
- CFC investment income calculation sheet
Financial Statement Submission
CFC financial statements may be submitted in the following ways:
- Prepared in accordance with financial accounting standards recognized by the Republic of China, and audited and certified by a qualified CPA in the country (or region) where the CFC is located or by a CPA in the Republic of China.
- Alternatively, if other documentation can sufficiently prove the authenticity of the CFC’s financial statements and is confirmed by the tax authority, such documentation may be used in place of CPA-audited statements.
With Years of Expertise in International Tax Planning, We Offer:
- Offshore Company Incorporation and Ongoing Maintenance
- Accounting Services for Controlled Foreign Companies (CFCs)
- CPA Audit Certification of CFC Financial Statements
- CPA Certification and Filing of Profit-Seeking Enterprise Income Tax Returns (Including CFC Reporting)
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Why Choose Us
Expertise
Our experts have extensive knowledge of Taiwan’s tax laws and stay up to date with the latest regulatory developments.
Customized Service
We understand that every client has unique needs. Our services are tailored to meet your specific requirements.
Strategic Approach
We take a strategic and proactive approach to effectively resolve tax-related issues while minimizing disruption to your business operations.
Client-Centered Focus
At Jaeslin & Co., client satisfaction is our top priority. We are committed to building long-term partnerships based on trust, integrity, and professionalism. Our goal is to reduce the stress and uncertainty associated with Controlled Foreign Corporation (CFC) tax planning and compliance, so you can stay focused on your core business activities.
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Whether you're dealing with CFC tax planning and reporting or seeking proactive advice, James Lin & Co. is ready to assist you. Contact us today to schedule a meeting with one of our experienced representatives. Let us help you navigate Taiwan’s competitive business environment with confidence.
Discover how our customized CFC services can benefit you and your business. Partner with James Lin & Co. for reliable expertise and dedicated support in Taiwan.
