Provisions on Taiwan Branch Sharing Headquarter Expenses

Provisions on Taiwan Branch Sharing Headquarter Expenses

According to the “Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax” Article 70, when a foreign company Taiwan branch is filling tax, it can apportion the management expenses of its headquarter. However, there are two constrains which have to be aware of:

  1. Firstly, the apportionment party is designated to the headquarter or regional headquarter, etc., and limited to non-operating departments only;
  2. Secondly, expenses listed as purchasing cost or fund interest, etc., should not be file as apportionment repeatedly.


If a Taiwan branch files an apportionment of management expenses, the target party must be its foreign headquarter, or the regional headquarter which is responsible for managing the branch. Another restriction is mainly focus on operating department. When a headquarter or regional headquarter intent to apportion the management expenses to its branch, it is assumed that its administrative department (non-operating department) does not involve in external business; otherwise, the administrative department under headquarter should cooperate with overseas branches and apportion the management expenses of non-operating department

Although it is challenging for Taiwan National Taxation Bureau to examine a foreign company headquarter overseas, it is likely to evaluate if the foreign company branch meets the regulation on separating administrative and operating department when apportioning the expenses, by reviewing auditor’s opinion.


Another important point to note is that repeated filling of cost is prohibited. Part of the expenses of headquarter or regional headquarter, such as purchasing cost or capital loan interest, etc., are probably filed as cost of the branch before filing as apportionment. Therefore, National Taxation Bureau will pay extra attention to examine if there are any possible repetition while reviewing apportionment between branch and headquarter.


For example, National Taxation Bureau has recently found out that a foreign company Taiwan branch filed a high amount of “other expenses” for Profit-seeking Enterprise Income Tax. After

inspecting the related evidence, it discovered that over 30 Million of the amounts was not apportionment of expenses of headquarter but to apportion an event expense of another overseas branch, which did not qualify as headquarter or regional headquarter, nor belong to non-operating department management expense. Therefore, the filed amount was denied, and supplementary tax payment was demanded.