When a profit-seeking enterprise obtains remuneration for directors and supervisors from an investee company, it shall report the income for taxation in the year in which it is obtained

The Taipei National Taxation Bureau of the Ministry of Finance stated that if the investment company is elected as the director and supervisor of the invested company, the remuneration for directors and supervisors obtained from the invested company should be listed in the taxable income tax in the year it is obtained, and the investment company is allocated from the domestic invested company. Domestic dividends are not included in the income tax according to the income tax law.
The Bureau gave an example. When checking the 2008 profit-seeking enterprise income tax settlement declaration of company A within its jurisdiction, it was found that company A received more than 12 million yuan in remuneration for the directors and supervisors of company B in that year. The company mistakenly regarded the remuneration of directors and supervisors as domestic dividends, and did not include the income tax in accordance with Article 42 of the Income Tax Law when declaring, resulting in an underreported taxable income of more than 12 million yuan, which was adjusted by the bureau. The tax income is more than 12 million yuan, and the punishment shall be in accordance with the provisions of the Income Tax Law on omission of income.
The bureau reminded that the taxation rules for profit-seeking enterprises’ remuneration for directors and supervisors are different from that of distribution dividend income. If you receive remuneration for directors and supervisors from the invested company, you should report the income for taxation in the year when you obtain it, so as to avoid missing the amount of income due to understatement. Was taxed and punished by the tax collection agency.
(Contact person: Section Chief Chen of the First Review Division; telephone 2311-3711 extension 1273)