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Taiwan’s Financial Reporting Requirements: What You Need to Know as an Expat Business Owner
As an expatriate business owner in Taiwan, ensuring compliance with local regulations is crucial for maintaining a positive corporate reputation and avoiding legal and financial risks. One critical aspect of this compliance is submitting audit reports, which are essential for maintaining transparency and accountability.
The Importance of Audit Reports
Audit reports play a vital role in building investor confidence and demonstrating a company’s commitment to financial transparency. For expatriate business owners, understanding the significance of audit reports is crucial for complying with local regulations and maintaining a positive corporate reputation.
Types of CPA Audits in Taiwan
There are three types of CPA audits required by Taiwanese businesses:
Financial Audit
Under Article 20 of Company Law, companies must submit their financial statements to shareholders or the company’s regular meeting after each accounting year. If an enterprise has reached a specific scale (NTD$30 million in capital, 100 employees, NTD$30 million loan from the bank, or NTD$100 million in sales), it must engage an accountant to review its financial report and submit an audit report to the government.
Tax Audit
Under the Income Tax Act, profit-seeking enterprises with certain criteria (financial industry, public company, enjoying tax benefits, applying for consolidated tax filing, or NTD$100 million in sales) must have their annual income tax return examined and signed by a registered accountant. The assigned accountant will inspect financial statements and corporate income tax returns to ensure compliance with local laws.
Capital Audit
When an enterprise is formed, merged, split, acquired, sold, increasing or decreasing its capital, it must engage an accountant to review its financial statements and prepare an audit report for submission to the company registration authority.
Benefits of Financial and Tax Audits
A sound financial statement proves a company’s good prospects, which benefits all stakeholders and provides shareholders with good investment returns. Additionally, companies can enjoy tax exemptions and carryforward losses by engaging in tax audits.
How Premia TNC Can Help
At Premia TNC, we offer comprehensive audit services tailored to meet the unique needs of your business. Our team of certified professionals is committed to ensuring financial accuracy, compliance, and transparency. We conduct thorough and meticulous audits of your financial statements, providing unbiased perspectives on areas for improvement and mitigation of risks.
FAQs
What are the benefits of tax audit?
- Companies can enjoy loss carryforward for 10 years
- Higher deductible amount of entertainment expenses for corporate income tax return
- CPA can provide tax advisory services
What are the consequences of non-compliance with the audit report requirement in Taiwan?
- Fines, penalties, business suspension, and legal action
How do I select a CPA for my Taiwan company?
- Choose a CPA with proper professional knowledge and experience on companies whose owner is a foreigner or overseas company. Effective communication skills are also essential.