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Taiwan’s Financial Reporting Requirements: A Comprehensive Guide

Taiwan, an island nation considered a free administrative unit of the People’s Republic of China, has a two-tier system of accounting standards. The first tier consists of Taiwan International Financial Reporting Standards (TIFRS), regulated by the Financial Supervisory Commission, while the second tier is composed of Enterprise Accounting Standards, governed by the Ministry of Economic Affairs.

Financial Reporting Requirements for Companies

For companies whose purpose is making profits, financial reporting requirements include:

  • Preparing annual financial statements
  • Keeping accounting records and minutes of meetings of members for at least 5 years
  • Maintaining electronic accounting databases with permission from the tax authority
  • Keeping financial statements for at least 10 years after the end of the reporting period

The currency used in accounts is the new Taiwan dollar (NTD), but companies can keep records in another currency if desired.

Auditing Requirements

Publicly traded companies are required to have their annual financial statements audited within 4 months after the financial year-end closing, while non-public companies must be audited if their authorized capital reaches or exceeds NT$30 million. Audits must be carried out by a certified public accountant (CPA) with a Taiwanese license.

Tax Return Auditing

In addition to auditing financial statements, companies in Taiwan are also required to audit their profit tax returns for the Taxation Administration of the Ministry of Finance. This requirement applies to companies with proceeds exceeding NT$100 million. Auditing a tax return can help decrease taxable profit and reduce the risk of government examination.

Filing Financial Statements

Taiwan has specific requirements for filing financial statements, including:

  • Deadlines for publicly traded companies
  • Penalties for late filing or payment of taxes
  • Requirements for consolidated tax returns, which must include all relevant local subsidiaries and do not require permission to file

Accounting Standards

Taiwan uses a modified version of IFRS called “ROC-IFRS” (Taiwan-IFRS), which is adopted by the Financial Supervisory Commission and enforced by the Certified Public Accountant (CPA) Act. However, companies listed on the Taiwan Stock Exchange may also use International Financial Reporting Standards (IFRS) for their financial reporting.

Conclusion

Overall, Taiwan’s financial reporting requirements are designed to ensure transparency and accountability in financial transactions, while also providing a framework for companies to operate effectively in the market.