Goto Main Content
:::

Select Folders:

Article Content

Article 1
These Regulations are enacted pursuant to the provision set out in Paragraph Four, Article 12 of the “Income Basic Tax Act” (hereafter referred to as this or the “Act”).
Article 2
The term “securities” as set forth in Item 3, Paragraph One, Article 12 of the Act shall mean the following stocks, (equity) certificates and /or (beneficiary) certificates:
1. stocks, certificates of entitlement to new shares, certificates of payment and documents of title to shares issued or placed privately by companies not yet having its stocks listed on a stock exchange or traded on the over-the-counter market when they are put to sale after January 1, 2006; and/or
2. beneficiary certificates of privately placed securities investment trust funds.
Article 3
A company not listed on any stock exchange nor traded on the over-the-counter market as referred to in Sub-item (1), Item 3, Paragraph One, Article 12 of the Act shall denote a company other than any of the following companies:
1. a company having its stocks listed on a stock exchange in accordance with Article 139 of the Securities and Exchange Act;
2. a company having applied for trading its stocks on the over-the-counter market in accordance with the “Regulations Governing Trading of Securities on Over-The-Counter Markets"; and
3. a company having applied to register its stocks to be traded on the over-the-counter market as emerging stocks in accordance with the “Regulations Governing Trading of Securities on Over-The-Counter Markets".
Article 4
The amount of securities transaction income shall be the balance amount to be calculated by subtracting from the transaction price the original acquisition costs and the necessary expenses of the securities traded.
When declaring the securities transaction income, the transaction price collection and payment records, the securities transaction tax payment receipt, the securities purchase and sale agreement or any other document sufficient to prove the transaction price shall be submitted [along with the income tax return] to the tax collection authority for its verification and assessment.
Article 5
In case a holder of a beneficiary certificate of a securities investment trust fund privately placed by a securities investment trust enterprise request for redemption of the beneficiary certificate, the redemption price thereof less the original acquisition costs and the necessary expenses of the beneficiary certificate shall be the income amount derived by the holder thereof from such redemption transaction.
Article 6
The annual securities transaction income derived or loss incurred shall be calculated by offsetting the total amount of income derived against the total amount of loss incurred from transaction(s) of any of securities defined in Article 2 hereof in the same year.
Article 7
The securities transaction loss incurred on or after January 1, 2006 may be deducted from the securities transaction income derived within three (3) years from the year following the year such loss is incurred provided that such securities transaction income and such deductible securities transaction loss are both calculated based on the actual transaction price and the original acquisition price of the securities sold out, and such income amount and loss amount have been verified and assessed by the tax collection authority.
Article 8
The securities transaction income derived from selling any of the securities defined in Item 1, Article 2 hereof shall be included in the amount of basic income in the year in which the closing date of the transaction falls.
Where the closing date of the transaction is a day on or after January 1, 2006, but it can be proven that the actual transaction date took place on or prior to December 31, 2005, then such transaction may be excluded from the application of the provisions set out in Item 3, Paragraph One, Article 12 of the Act.
The securities transaction income derived from selling any of the securities defined in Item 2, Article 2 hereof shall be included in the amount of basic income in the year in which the date of transfer of ownership under that transaction falls.
Where a beneficiary has requested the securities investment trust enterprise to redeem the beneficiary certificate, the income derived from such redemption transaction shall be included in the amount of basic income in the year in which the redemption price determination date as fixed in the subscription agreement falls. However, if an evidence proving the fact that the beneficiary certificate redemption request was served to the securities investment trust enterprise or its authorized agency on or before December 31, 2005, Sub-Item (2), Item 3, Paragraph One, Article 12 of the Act shall not apply.
Article 9
Where an individual person engaging in the transaction related to either of the type of securities defined in Article 2 of these Regulations fails to declare his/her income derived from such transaction, or fails to provide the actual transaction price adopted in such securities transaction under the law, then the transaction price of such transaction shall be calculated in accordance with either of the following applicable methods:
1. In the case of the securities defined in Item 1, Article 2 hereof, the transaction price shall be calculated based on the net assets value of the issuing company as of the closing date of the transaction.
2. In the case of the securities defined in Item 2, Article 2 hereof, the transaction price shall be calculated based on the net assets value of the trust fund as of the date of transfer of the beneficiary certificate under that transaction; whereas, in the case of redemption of the beneficiary certificate by a securities investment trust enterprise at the request of a beneficiary, then the transaction price of such redemption transaction shall be calculated based on the redemption price fixed in the subscription agreement.
Article 10
The cost of stocks, certificates of entitlement to new shares, certificates of payment and documents of title to shares, as referred to in Article 4 hereof shall be determined respectively in accordance with the following provisions:
1. For securities acquired through purchase, the transaction price shall serve as the acquisition cost thereof;
2. For securities acquired through dividend distribution, the face value of the dividend stock received shall serve as the acquisition cost thereof;
3. For securities acquired through capital increase by cash initiated by the company: the new share offering price shall serve as the acquisition cost thereof;
4. For securities acquired through capitalization of capital reserve, the acquisition cost shall be zero thereof;
5. For securities acquired through public offering, the acquisition price shall serve as the acquisition cost thereof;
6. For securities acquired as promoter share(s) or offering share(s) issued by the company at the time of its incorporation, the offering price shall serve as the acquisition cost thereof;
7. For securities acquired through succession of estate or as a gift, the market price of such securities prevailing at the time of succession or bestowment shall serve as the acquisition cost thereof provided, however, that if the securities are acquired through bestowment of gift between spouses, and such gifts conform to the provisions set out in Item 6, Paragraph One, Article 20 of the Estate and Gift Tax Act as amended and promulgated on January 13, 1995, or the provisions set out in Paragraph Two, Article 20 of the Estate and Gift Tax Act as amended and promulgated on June 24, 1998, then the cost prior to the first bestowment of such securities shall serve as the acquisition cost thereof;
8. For securities acquired as an employee's bonus, the face value of such stocks shall serve as the acquisition cost thereof. However, in case the difference between the market price of the stocks on the day following the date such stocks can be disposed of and the face value of such stocks has been included in the amount of basic income of such employee and the basic income tax payable thereon has been imposed, then the market price prevailing on the day following the date such stocks can be disposed of shall serve as the acquisition cost thereof;
9. For securities acquired through exercising stock option, the market price as of the date of exercise of such stock option shall serve as the acquisition cost thereof;
10. For securities acquired due to the entitlement to the income portion of a trust, where the beneficiary thereof is specified and the settler has not reserved the right to designate any beneficiary of the trust or the right to distribute or disposal of the income of the trust, the par value of such stocks shall serve as the acquisition cost thereof; whereas, if the beneficiary is not specified or not yet in existence, then the market price of such stock on the date the trust acquired such stocks shall serve as the acquisition cost thereof;
11. For securities acquired through conversion of convertible securities, the covenanted conversion price shall serve as the acquisition cost thereof. In the absence of such covenanted conversion price, the net assets value of the issuing company as of the date of conversion shall serve as the acquisition cost thereof;
12. For securities acquired by an individual holder on or after January 1, 2004 with the value or royalty of his/her patent right or technical know-how assigned or licensed to the issuing company of such securities as his/her capital contribution to offset the share subscription price payable by him/her to the company, such share subscription prices shall serve as the acquisition cost thereof. For securities acquired on or prior to December 31, 2003 using the patent rights and/or technical know-how as his/her capital contribution, the par value of such securities acquired shall serve as the acquisition cost thereof;
13. For securities acquired which are classified as but do not fulfill the definition of deferred shares as prescribed in Article 19-2 of the Statute for Upgrading Industries, in the event of subsequent transfer of such shares, the par value of such stocks shall serve as the acquisition cost thereof. If the actual transfer price is below the par value of such stocks, the actual transfer price shall serve as the acquisition cost thereof; or
14. For securities acquired through any other approaches, the actual transaction price shall serve as the acquisition cost thereof.
Article 11
With respect to the beneficiary certificates of any privately placed securities investment trust fund, the acquisition cost thereof as required under Articles 4 and 5 hereof shall be determined in accordance with the following rules:
1. For beneficiary certificates acquired through a private placement of such beneficiary certificates by securities investment trust enterprise, the subscription price thereof shall serve as the acquisition cost;
2. For beneficiary certificates acquired through assignment thereof by the original holder thereof, the assignment price shall serve as the acquisition cost;
3. For beneficiary certificates acquired through succession of estate or as a gift, the market price of such beneficiary certificates prevailing at the time of succession or bestowment shall serve as the acquisition cost. However, if the beneficiary certificates are acquired through bestowment of gift between spouses, and such gifts conform to the provisions set out in Item 6, Paragraph One, Article 20 of the Estate and Gift Tax Act as amended and promulgated on January 13, 1995, or the provisions set out in Paragraph Two, Article 20 of the Estate and Gift Tax Act as amended and promulgated on June 24, 1998, then the acquisition cost of such beneficiary certificates at the time prior to the first bestowment of such securities shall serve as the acquisition cost thereof; or
4. For beneficiary certificates acquired through any other approaches, the actual transaction price shall serve as the acquisition cost thereof.
Article 12
The necessary expenses referred to in Articles 4 and 5 hereof shall mean the securities transaction tax and service charges.
Article 13
For an individual trading in any of the securities defined in Article 2 hereof who can provide the original acquisition cost data, the acquisition cost shall be determined based on the specific identification method, or on the value of the securities issued by the same company or the same investment trust fund enterprise at the time of sale of such securities, and calculated under the weighted average method as prescribed in Article 46 of the Enforcement Rules of the Income Tax Act.
The cost verification and determination method adopted under the provisions set forth in the preceding Paragraph shall be stated explicitly in income tax return to be filed when making the initial declaration of the securities trading profit and loss.
For an individual trading in any of the securities defined in Article 2 hereof who can not provide the original acquisition cost data, the acquisition cost shall be verified and determined by the tax collection authority under the weighted average method based on the data collected by the tax collection authority.
Where the weighted average method is adopted in calculating the acquisition cost in accordance with the provisions set out in the preceding Paragraph One and/or Paragraph Three, the same method shall be adopted in each ensuing tax year.
Article 14
Where an individual trading any of the securities defined in Article 2 of these Regulations fails to declare his/her securities transaction income, or fails to provide any supporting documents evidencing his/her securities transaction income, the tax collection authority shall calculate the amount of his/her securities transaction income in accordance with the following provisions:
1. Where the taxpayer has provided the actual transaction price of relevant transaction, or the actual transaction price of relevant transaction has been discovered, but the original acquisition cost cannot be proved, then an amount equal to 20% of the actual transaction price shall be adopted as his/her securities transaction income; or
2. Where the taxpayer has not provided the actual transaction price of relevant transaction, then an amount equal to 75% of the amount of revenue as calculated under Article 9 hereof shall be adopted as his/her securities transaction income.
Where the actual income amount discovered by the tax collection authority during investigation is greater than the amount of securities transaction income calculated under the provisions set out in the preceding Paragraph, the actual income amount discovered by the tax collection authority shall prevail.
Article 15
These Regulations shall come into force from January 1, 2006.