Enforcement Rules of the Income Tax Act Article 31-3

Where the government bonds, corporate bonds, and financial bonds obtained by a profit-seeking enterprise are zero coupon bonds, the daily interest shall be calculated first by amortizing the difference between the purchase price of the bonds and the par value over the period throughout the date of the maturity of the bonds, then calculate the interest revenue by multiplying the daily interest with the number of days held by the profit-seeking enterprise; the amount of tax which is allowed as a deduction against the amount of the profit-seeking income tax payable for the annual income tax return shall be calculated by multiplying the tax withheld in accordance with the provision of Subparagraph 2, Article 85-2 by holding period.Where the government bonds, corporate bonds, and financial bonds obtained by a profit-seeking enterprise includes option rights such as conversion, swap, repurchase or redemption rights, the interest premium shall be included in the amount of the income in the year of receipt; in the case that the bonds were appointed at a coupon rate, the interest revenue shall be calculated in accordance with the holding period, at the par value and the coupon rate of the bonds, the amount of tax which is allowed as a deduction against the amount of the profit-seeking enterprise income tax payable for the annual income tax return shall be calculated in accordance with the prescribed withholding rates.