Regulations Governing Application of Calculating Income from Controlled Foreign Company for Individual Article 9

Where an individual receives dividends or surplus earnings from each controlled foreign company, the amount received has been calculated as income from profit-seeking activities and included in the basic income of the current year under the preceding article shall not be included in the basic income of the distribution year; the excess amount shall be included in the basic income of the distribution year.If the difference between the dividends or surplus earnings not included in the basic income of the distribution year, as mentioned in the preceding paragraph, and the actual amount distributed, which arises from the difference in exchange rates on the distribution date and the rate used to calculate the current-year earnings of the controlled foreign company according to Articles 6 and 7, is a positive number, it shall be calculated as the individual's income from profit-seeking activities of the distribution year, as prescribed in Subparagraph 1 of Paragraph 1 of Article 12 of the Basic Income Tax Act. If the said difference is a negative number, it may be deducted from the individual's basic income for the distribution year, but the deduction cannot exceed the basic income of the distribution year.Where an individual has received dividends or surplus earnings from each controlled foreign company, the income tax paid on such dividends or surplus earnings according to the tax laws of the source jurisdiction may be credited against the basic tax of the year in which the income from profit-seeking activities is included in the individual's basic income as per the forepart of Paragraph 1 of Article 13 of Income Basic Tax Act, within five years from the day following the filing deadline; any overpaid tax is refundable. The credited amount cannot exceed the increase in basic tax calculated due to the inclusion of such income from profit-seeking activities under regulations.Where an individual transfers of the shares or capital of a controlled foreign company, the gain or loss from transaction shall be calculated in accordance with the following provisions:1. Gain or loss from transaction = Income resulted from the transaction – Original acquisition cost – The balance of the calculated income from profit-seeking activities of the controlled foreign company on the transaction date × Transaction ratio.2. The balance of the calculated income from profit-seeking activities of the controlled foreign company on the transaction date, as shown in the preceding subparagraph = The income from profit-seeking activities of the controlled foreign company that has been calculated in accordance with Paragraph 1 of the preceding article cumulative to the transaction date – The actual distributed dividends or surplus earnings of previous years excluded from the basic income of the distribution year in accordance with Paragraph 1 – The deductions of the income from profit-seeking activities balance of the controlled foreign company, to be calculated based on the transaction ratios of previous years.