Recognition Regulations for Foreign Currency Exchange Gains and Losses of Profit-seeking Enterprises
The National Taxation Bureau of the Northern Area (NTBNA), MOF, stated that if the transaction engaged in by a profit-seeking enterprise involves foreign currency, and the receipt and payment are made through the company's foreign exchange deposit account, when the account is withdrawn or canceled and converted into NT dollars, according with Paragraph 1, Article 29 and Paragraph 1, Article 98 of the Regulations Governing Assessment of Profit-seeking Enterprise Income Tax, the exchange gains and losses arising from changes in the exchange rates of withdrawals and deposits may be listed as gains or losses; if the foreign exchange deposit account is not actually redeemed or terminated, the book difference arising only from changes in the exchange rate shall not be listed as exchange gains or losses for the current year.
As an example, the Bureau stated that Company A reported an exchange loss of NT$7 million in the 2020 profit-seeking enterprise income tax settlement and declaration. After inspection, it was found that the company's foreign currency time deposits were renewed by exchanging documents when they matured, and the timing of the exchange of time deposits was deemed as the realization of exchange gains and losses. As it is still a foreign currency time deposit at the end of the fiscal year, the book exchange gains and losses due to exchange rate changes are unrealized gains and losses. According to the regulations disclosed above, losses are not allowed to be listed, so the exchange loss reported by Company A is excluded, and the taxable income is increased by NT$7 million.
The Bureau would like to especially remind profit-seeking enterprises that, when a foreign currency time deposit that is renewed in the current year and is not withdrawn or terminated, the book exchange loss caused by the exchange rate changes is an unrealized loss. According to the relevant regulations of the law, when declaring the income tax of a profit-seeking enterprise, no loss shall be listed, so as to avoid the exclusion of non-compliance with the regulations and tax payment, which will affect one's own rights and interests. If there are any questions, please visit the website of NTBNA (https://www.ntbna.gov.tw) to inquire the relevant laws or call the toll-free service number 0800-000321. We will provide consulting services wholeheartedly.
(Contact window: Profit-seeking Enterprise Income Tax Division Telephone: (03)3396789 Ext.1340)
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=0e1f77b2074646fdb0001b057c942f43