Exploring the Effects of Anti-avoidance Rules in Taiwan

• Main Authors: Liu, Ching-Fang, 劉靜芳
• Other Authors: Chen, Huei-Ling
• Format: Others
• Language: zh-TW
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/e457eb

碩士 === 國立臺灣師範大學 === 高階經理人企業管理碩士在職專班(EMBA) === 105 === In response to the trend of enacting general anti-avoidance rules in other countries, policy makers in Taiwan amended the Article 43-3 (Controlled Foreign Corporation Rule) and Article 43-4 (Places of Effective Management Rule) of Income Tax Act on July 12, 2016. The objective of this study is to investigate to what extent anti-avoidance rules affect Taiwanese companies, financial institutions, and F-shares. This study also explore the impacts on firms and shareholders if the Cross-Strait Taxation Agreement and anti-avoidance rules are implemented at the same time. Through literature review, in-depth interviews, and tax simulation, this study finds that firms whose places of effective management in Taiwan but investment in China through the third place may have more after-tax cash flow for operation if anti-avoidance rules and the Cross-Strait Taxation Agreement are implemented at the same time. Shareholders are also able to have higher imputation tax credit account, and the magnitude of double taxation will reduce. In addition, F-shares firms whose places of effective management in Taiwan are treated as Taiwanese firms. Therefore, firms must pay profit-seeking enterprise income taxes. Dividends received from these F-shares are included in individual shareholders’ adjusted gross income calculation and thus increase their tax burdens. According to the Common Reporting Standards, financial institutions in Taiwan need to provide financial account information to revenue authorities. The compliance cost of Taiwanese financial institutions will increase and businesses from offshore banking units will decline. This study suggests that the trend of tax information sharing amongst sovereign governments is unavoidable. Thus, firms need to understand the importance of anti-avoidance rules and then develop new and appropriate tax strategies. Policy makers in Taiwan should amend anti-avoidance rules thoroughly to reduce the negative impact on economy.