Taiwan Tightens Financial Reporting Requirements for Businesses

Enhancing Transparency and Accountability

The Taiwanese government has introduced new financial reporting requirements for businesses operating in the region, aimed at promoting transparency and accountability. According to sources, companies will now be required to use International Financial Reporting Standards (IFRS) as endorsed by the Financial Supervisory Commission (FSC), with some exceptions.

Tax Year and Fiscal Year

The tax year for businesses in Taiwan will remain January 1 to December 31, which coincides with the fiscal year. However, companies may opt for a non-calendar year-end with permission from the FSC.

Flexibility for Foreign Companies

Foreign companies operating in Taiwan have been given the flexibility to choose between:

IFRS Standards as endorsed by the FSC
Original IFRS Standards
US Generally Accepted Accounting Principles (GAAP)

Regulatory Bodies

The Financial Supervisory Commission is responsible for regulating accounting practices in Taiwan, while the Federation of CPA Associations of Chinese Taiwan serves as a professional accountancy body.

Compliance Requirements

To comply with the new requirements, each company must produce:

A balance sheet
Profit and loss account for each accounting year

Additionally, companies with paid-in capital exceeding NT$30 million will be required to undergo statutory audits.

Guide to Accounting and Auditing Requirements in Taiwan

For more information on accounting and auditing requirements in Taiwan, businesses are advised to consult the Guide to Accounting and Auditing Requirements in Taiwan.

Effectiveness of Changes

The updated financial reporting requirements aim to promote greater transparency and accountability among Taiwanese businesses, aligning with international best practices. The changes take effect immediately, with companies expected to comply by the next accounting year.