Regulations Governing Application of Agreements for the Avoidance of Double Taxation with Respect to Taxes on Income Article 15

Pursuant to the provisions in association with the term capital gains under a DTA, where there are gains derived by a resident of the other Contracting State from the alienation of shares in a company, and the ROC may tax such gains from the alienation of shares due to these shares derived more than a certain percent of their value from immovable property situated in the ROC, the proportion of the value of the alienated shares that is derived from immovable property situated in the ROC shall be determined at the time of the alienation of shares by a fraction calculation of which the numerator is to be the aggregated market value of the immovable properties of the company situated in the territory of the ROC, while the denominator is to be the aggregated market value of all assets of that company.In the event that the market value of the immovable proprieties of the company situated in the territory of the ROC referred to in the preceding paragraph is unknown or difficult to determine, the relevant values used for the fraction calculation may be determined based on the amounts stated in the balance sheet of its most recently filed annual profit-seeking enterprise income tax return. In the case that the company in question is a profit-seeking enterprise having its head office outside the territory of the ROC, those values may be determined based on the amounts stated in its most recent balance sheet prepared for financial accounting purposes.