Taiwan releases Decree on advance pricing agreements

Taiwan's Ministry of Finance has released a Decree regarding principles of tax collection authorities concluding cross-border bilateral or multilateral advance pricing arrangements under the Mutual Agreement Procedures of the applicable Income Tax Agreements.

The Ministry of Finance explained that, all of its 33 effective income tax agreements include an Article of "Mutual Agreement Procedures"(hereinafter referred to as "MAP"). Multinational enterprise (MNE) groups apply for BAPAs based on the MAP provisions in order to avoid double taxation arising from the transfer pricing adjustments made respectively by the tax collection authorities of the contracting parties on the income of the controlled transactions.

The Ministry of Finance further explained that, considering different countries with their own domestic transfer pricing laws and regulations to adjust the results of the controlled transactions not within the arm's length range differently, and different industries bearing different levels of risk towards business cycles or operation cycles, the Ministry of Finance released this Decree to grant the tax collection authorities flexibility to negotiate with the competent authorities of the treaty partners.

See Decree