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Taiwan has local TP rules requiring transactions between related parties to be conducted​ on arm's length terms.  The transfer pricing methods under the TP rules include: comparable uncontrolled price, comparable uncontrolled transaction, resale price, cost plus, comparable profits, profit split or other methods provided by the Ministry of Finance. The TP rules apply to not only operational transactions but also business restructuring transactions.  Taxpayers are required to prepare contemporaneous documentation of related party transactions.  Penalties may be imposed for failure to comply with the arm's length principles and the documentation requirements.  

 

In 2017, the Ministry of Finance decided to adopt the OECD's BEPS Action 13 guidance into local rules and introduce a three-tiered transfer pricing documentation regime (master file "MF", country-by-country report "CbCR", local file "LF") which would be applicable to fiscal years beginning on or after January 1, 2017.  The amendment to local rules was approved and announced in November 2017.  After that, related tax rulings were also issued accordingly.

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Taiwan tax authorities regularly review TP documentation when assessing each tax year's corporate income tax returns.  In addition, they also select certain cases for special TP audits, under which a more strict review will be conducted and taxpayers should be well prepared for an in-depth inquiry and the prolonged negotiation.

     

In Taiwan, advance pricing agreements ("APA") are possible.

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