To encourage profit-seeking enterprises to use their earnings to make substantial investment or upgrade production technology or the quality of products or services, if a company or limited partnership uses a certain amount of its undistributed earnings to construct or purchase buildings, software or hardware equipment, or technology for use in production or operation as needed for operation of its business or ancillary business within three years from the year after such earnings are derived, such investment amounts may be deducted from the undistributed earnings in calculation of the current year’s undistributed earnings for assessment of additional profit-seeking enterprise income tax leviable on undistributed earnings from the year 2018 under Article 66-9 of the Income Tax Act.
When a company or limited partnership eligible for the tax benefit under the preceding paragraph declares its undistributed earnings in accordance with Article 102-2 of the Income Tax Act, it shall enter the data on the prescribed forms and submit documents proving such investment to the local taxation authority.
Where a company or limited partnership eligible for the tax benefit under Paragraph 1 completes the investment after it has paid the additional profit-seeking enterprise income tax on its undistributed earnings, it shall apply to the local taxation authority for recalculation of its undistributed earnings for that year and refund of the overpaid tax by filing the prescribed forms and submitting documents proving such investment in accordance with Paragraph 1.
Regulations for the amounts of undistributed earnings under Paragraph 1, the prescribed forms and documents proving investment under Paragraph 2, the procedure for applying for refund of overpaid tax, and the documents needed to be submitted under the preceding paragraph, and other related matters shall be prescribed by the Ministry of Finance.