Corporate - Deductions

Last reviewed - 02 February 2024


Depreciation on all fixed assets other than land, including premises, plants (buildings), and equipment, which are used to generate income, is allowed as a deduction. The straight-line, fixed percentage on diminishing book value, sum-of-years-digit, unit-of-production, and working-hour methods are acceptable depreciation methods to the tax office. The useful lives of typical assets are shown below:

Asset category Useful life (years)
Computer equipment 3
Furniture and fixtures 5
Automobile 5
Building 50

With the approval of the tax authority, a company may revalue its fixed assets each time the government’s wholesale price index increases by 25% over the base period. A company’s base period is established at the time of purchase of fixed assets or at such time when a company revalues its fixed assets. Any increase in fixed assets may then be depreciated for tax purposes.


Goodwill is commonly realised from merger and acquisition, which should follow the purchase method as defined under Taiwan Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). Goodwill should be amortised for 15 years if a valuation report is issued by a creditable professional valuation firm and the net identifiable assets are valued separately. However, in practice, the amortisation of goodwill is frequently challenged by the Taiwan tax authority.

Start-up expenses

Start-up expenses during the start-up period can be deducted in the year incurred. The start-up period is from the preparatory stage to the date the business starts to generate significant revenue from its primary business operation.

Interest expenses

Interests on loans that are used for business purposes are deductible in the year incurred. However, for a loan from a non-financial institution, the interest rate shall not exceed 15.6% per annum. As for interest on inter-company loans, the deductible amount is subject to the thin capitalisation rule and transfer pricing regulations (see the Group taxation section).

Bad debt

Actual losses on bad debts are allowed for deduction when certain legal proceedings or time requirements have been satisfied. The loss should first be charged against the bad debt provision, which should not exceed either 1% of accounts receivable and notes receivable outstanding, or the actual average bad debt ratio for the past three years.

Charitable contributions

Charitable contributions to support national defence, troop morale, contribution to government of any level, and donation made with special approval of the MoF are not subject to any tax limit. Donations to other parties are subject to prescribed limits under the relevant regulations.

Fines and penalties

Fines and penalties arising from violation of various tax laws are generally not deductible.


All taxes, other than income tax, are generally deductible, unless where such taxes are related to tax-exempt income. The tax associated with the acquisition of real estate should be included in the cost of the land or building.

Net operating losses

A company’s net operating losses can be carried forward for ten years. Losses cannot be carried back.

Payments to foreign affiliates

Royalties, interest, and service fees paid to a foreign affiliate are subject to WHT. Royalties or service fees paid to a foreign entity may be tax-exempt if certain requirements are met and prior approval is obtained.