Expenses or losses filed by profit-seeking enterprises should be related to business operations
The expenses or losses filed by profit-seeking enterprises should be attached with legal certificates and be related to their operation of business or subsidiary business in order to be declared as expenses or losses of profit-seeking enterprises.
The National Taxation Bureau of Kaohsiung, Ministry of Finance, stated that, according to Article 38 of the Income Tax Law and Article 62 of the Guidelines for Examination of Profit-Seeking Enterprise Income Tax, losses incurred not in the course of operation of business or subsidiary business, and family expenses shall not be considered as expense or loss. The legislative intent thereof is to distinguish between business expenses and family expenses, emphasizing that expenses not necessary for the operation of profit-seeking enterprises must not be declared as such.
The Bureau further provided an example: While verifying Company A’s 2022 profit-seeking enterprise income tax declaration, the Bureau discovered that Company A had filed NT$500,000 in expenses for clothing, quality goods, and kitchen implements from department stores as its operating expenses for the current year. The Bureau then requested that Company A explain the relevance of these expenses to its business operations or subsidiary activities. Since Company A could not reasonably explain this or provide relevant certification, the Bureau disallowed the expenses on the grounds that they were not related to the operation of business or subsidiary business
The Bureau reminds profit-seeking enterprises that, when filing profit-seeking enterprise income tax return, special attention should be paid to relevant regulations to avoid being asked to pay any additional tax levied. In case of further questions, taxpayers are welcome to call the toll-free number 0800-000-321 or visit the Bureau’s official website （https://www.ntbk.gov.tw） to use the national taxation intelligent customer service “Little Helper for Tax” to make an inquiry.
Provided by: Profit-Seeking Enterprise Income Tax Section
Contact person: Ms. Kuo, Section Chief Telephone: （07）725-6600 Ext.7170
Written by:Ms. Chang Telephone: （07）725-6600 Ext.7176
Reference URL：https://www.mof.gov.tw/Eng/singlehtml/f48d641f159a4866b1d31c0916fbcc71?cntId=6bc159e6e23f4271b7799959b02b82bd