If the transactions undertaken by a profit-seeking enterprise with related parties satisfy the following criteria, the enterprise may file an application for an advance pricing arrangement with the collection authority-in-charge pursuant to the provisions set out in this Chapter:
1. In order to apply for advance pricing arrangements, the total amount of the transactions shall be no less than NT$500 million; or, the annual amount of such transactions is no less than NT$200 million;
2. No significant tax evasions were committed in the past three years;
3. Documentation as required under Subparagraphs 1 to 3 and Subparagraphs 5 to 9, Paragraph 1 of Article 24 has been well-prepared;
4. Preparation of a Transfer Pricing report as prescribed under Subparagraph 4, Paragraph 1 of Article 24 has been completed; and
5. Other criteria approved by the MOF.
The profit-seeking enterprises which apply for the advance pricing arrangement (hereinafter referred to as the "Applicants") should file the application pursuant to the format with the collection authority-in-charge before the end of the first fiscal year in which the transactions prescribed in Subparagraph 1 of the preceding paragraph occurred. In situations where more than one Applicant is involved, one of the Applicants shall be designated to file the application (on their behalf). The collection authorities-in-charge shall notify the Applicant whether to accept the application within one month of its receipt of the application in writing. With respect to an accepted application, the Applicant shall supplement the documents and reports set forth in Subparagraphs 3 and 4 of the preceding paragraph within three months of the service of the written notice of acceptance.
The prescribed format of the application shall specify the following:
1. Name, government uniform invoice (“GUI”) number or identification number, and address of the Applicant and its agents;
2. Original power of attorney shall be attached if the application is made and filed through an agent;
3. Brief description of the transaction being applied for advance pricing arrangement;
4. Total amount or annual amount of the transactions being applied for advance pricing arrangement;
5. Whether the documents and reports prescribed in Subparagraph 3 and 4, Paragraph 1 of this Article have been fully prepared;
6. Whether in past years the Applicants have ever been subject to investigation on their Non-Arm's-length transactions conducted by the collection authorities-in-charge; and
7. Other information required.
Before filing an advance pricing arrangement in accordance with Paragraph 1, a profit-seeking enterprise may prepare the following information to file a written application of the pre-filing meeting three months prior to the end of the first fiscal year covered by the transaction of Subparagraph 1 of Paragraph 1, to let collection authorities-in-charge assess whether to agree to the application.
1. The application period of the advance pricing arrangement.
2. The global organization structure of the group.
3. Main business scope of the enterprise.
4. The related parties, the type of Controlled Transactions, and an explanation of the functions and risks.
5. Reasons of the application for the advance pricing arrangement.
6. Other necessary explanations.
The collection authorities-in-charge shall complete the aforementioned pre-filing meeting within three months after the application, and notify the applicant in writing about the result. Taxpayers shall prepare the documents and reports in accordance with Subparagraphs 3 and 4 of Paragraph 1 with the format of the application in accordance with Paragraph 2, to apply for the advance pricing arrangement to the collection authority-in-charge within three months after receiving the notification.
If an Applicant fails to provide related documents and reports within the time limit prescribed in Paragraph 2 or 5, the collection authority-in-charge may reject or refuse its application for advance pricing arrangement.
If the profit-seeking enterprises apply for a cross-border advance pricing arrangement or multilateral advance pricing arrangement, they shall apply to our competent authority in accordance with the applicable tax treaty and the related laws to proceed the mutual agreement procedure with the competent authority of the contracting state.

To apply for an advance pricing arrangement with the collection authority-in-charge, the Applicant or its agent shall furnish the following documents and reports:
1. Organization charts of Affiliated Enterprises home and abroad.
2. Relevant information on the related parties involved in the transactions being applied for advance pricing arrangement, including an analysis report covering the following six aspects: operation, legal, tax, finance, accounting, and economy as well as the income tax return and financial statements for the three years prior to the application.
3. Relevant information concerning the transaction applying for an advance pricing arrangement:
(1)Name of the related parties involved in the transaction and their relationship with the Applicant;
(2)Type, flow, date, object, amount, price, and contractual terms of the transaction as well as the use of property or services transferred. The use shall include the descriptions regarding whether the property is transferred for sale or use and its benefits; and
(3)The time period covered by the related transaction.
4. The transfer pricing report shall, in addition to being subject to Paragraph 1 of Article 22, specify the following information:
(1)Assumptions affecting the pricing;
(2)An analysis of value contribution and profit allocation of related parties in Controlled Transactions.
(3)In case of adopting an Arm's-length Method not provided in the Regulations, a special analysis along with supporting evidentiary documents explaining the reasons why such method is more suitable than those Arm's-length Methods as provided and how it can achieve an Arm's-length result.
(4)Important financial accounting policies that have a direct impact on the pricing methods.
(5)The material differences in financial accounting and tax laws between the countries involved in the transaction being applied for the advance pricing arrangement and the ROC, provided, however, that such differences would have an impact on the adoption of Arm's-length Method.
5. The pricing information of the same transactions or related transactions conducted by the Applicant and other related parties.
6. The annual forecast of the operation results and business plans within the effective period of the advance pricing arrangement.
7. Upon filing the application, the explanations or conclusions on issues related to the adoption of the Transfer Pricing method that have occurred or are currently under discussion with local or foreign competent authorities, or the advance pricing arrangements that have been approved with foreign competent authorities.
8. Whether these issues are related to potential double taxation and whether bilateral or multilateral advance pricing arrangements of tax treaty countries are involved.
9. Other information as requested by the collection authorities-in-charge.
The Applicant or its agent shall attach a table of contents and an index when filing the documents and reports in accordance with the preceding paragraph. If the information to be produced is in a foreign language, a Chinese translation thereof shall also be attached, unless otherwise approved by the collection authority-in-charge to provide an English version.

Before the advance pricing arrangement is concluded, in case of any significant occurrence of the events that would affect the transaction result, the Applicant or its agent shall inform the collection authority-in-charge in writing within one month, and modify the documents and reports as set forth in Paragraph 1 of the preceding article within the prescribed time limit to be submitted to the collection authority-in-charge. In case that it does not inform or submit the modified documents according to the regulations, the collection authority-in-charge may terminate the negotiation.

Collection authorities-in-charge shall review, assess and reach a conclusion within one year from its receipt of the documents and reports submitted by the Applicant or its agent in accordance with Article 24. When reviewing and assessing the application, if necessary, the collection authorities-in-charge may inquire the Applicant or its agent, or request it to provide supplemental data or documents.
If under special circumstances, an extension of the review and assessment period is necessary, the collection authorities-in-charge shall notify the Applicant or its agent before the expiration of the aforesaid period. The extension period shall not exceed six months. If necessary, another six-month extension is allowed. However, the aforesaid review and extension period is not applicable when an application involves bilateral or multilateral advance pricing arrangement under tax treaties.

Within six months since the conclusion has been reached after the review and assessment, the collection authorities-in-charge shall discuss with the Applicant or its agent the comparables and its transaction result, assumptions, pricing policies, calculation methods, application period and other major issues. After reaching an agreement, the Applicant or its agent shall enter into an advance pricing arrangement with the legal representative or authorized person of the collection authority-in-charge. Once an advance pricing arrangement is signed, both parties shall be obliged to execute and comply with the same accordingly.
The application period of the advance pricing arrangement is limited to three to five years from the year in which the application is filed; provided, however, that if the period of the related transaction is shorter, the period specified in the application shall apply.

An advance pricing arrangement shall specify the following contents:
1. Related parties to the arrangement;
2. Controlled Transactions and their period for concerned related parties;
3. Assumptions affecting the pricing policy;
4. Pricing policy and Arm’s-length method adopted;
5. Terms of the arrangement, effective period and its effect;
6. Obligation of the Applicant, including the provision of annual report and impact report in accordance with Article 29 hereof, the retention of documents and reports set forth in Article 24 hereof, and the notice of change to factors affecting the transaction result in accordance with Article 31 hereof;
7. The treatments of breaching of the arrangement;
8. Amendments to the arrangement;
9. The approach and procedure of dispute settlement; and
10. Other specific provisions.

The Applicant shall submit the annual report on the execution of the advance pricing arrangement to the collection authority-in-charge within the tax return filing period of the applicable fiscal year during which such advance pricing arrangement is in effective, and retain the documents and reports in accordance with Article 24 hereof.
The foregoing annual report shall include the actual pricing and the profit and loss of each participant, the execution of the advance pricing arrangement, the change of the assumptions and factors affecting the transaction result.
If prior to the sign-off date of the advance pricing arrangement, the Applicant has filed the tax return for the fiscal year within the effective period of the advance pricing arrangement, an impact report on the influences in the contents of the tax return filed by applying the terms of advance pricing arrangement shall be submitted within the period designated by the collection authority-in-charge, and the requirement to submit the annual report under Paragraph 1 shall not apply.

For the transactions conducted meeting the provisions of the agreement and complying with the terms of the agreement during the effective period of advance pricing arrangement, the collection authorities-in-charge shall assess the taxable income in accordance with the Arm's-length Method and the result described in the arrangement. In the event that there is a violation or incompliance with the terms of the arrangement, the collection authorities-in-charge are entitled not to follow the terms stipulated in the arrangement and conduct an investigation in accordance with these Assessment Regulations.
The arrangement shall be deemed void retroactively if the Applicant conceals material matters, provides misleading information, or is involved in fraud or unlawful conducts.

During the effective period of advance pricing arrangement, if there is manifest change of the factors affecting the transaction result, including: a change to any key assumptions, the parties involved are no longer associated enterprises or the price should be re-negotiated under the contractual terms, the Applicant shall notify the collection authority-in-charge within one month from the occurrence of such change, and the collection authority-in-charge shall, based on the circumstances, take necessary measures, including: negotiate with the profit-seeking enterprise to amend the terms and conditions of the advance pricing arrangement, or void the application of such advance pricing arrangement.

The Applicant who has fully complied with all terms and conditions of the advance pricing arrangement may, prior to the expiration of such agreement, submit the data to evidence no substantial change to the relevant facts or environment resulting in influencing the content of the advance pricing arrangement, apply with the collection authority-in-charge for an extension. The advance pricing arrangement can be signed again subject to the review and approval of the collection authority-in-charge, provided, however, that the extension period shall not exceed five years.