Regulations Governing Application of Agreements for the Avoidance of Double Taxation with Respect to Taxes on Income Article 4

Persons to be covered by the application of a DTA shall be limited to those residents of the ROC and residents of the other Contracting State. However, in the case that the applicable DTA provides otherwise, provisions thereof shall prevail.When a resident of the other Contracting State is subject to income tax in accordance with the stipulations under the Income Tax Act, the Income Basic Tax Act, and relevant laws and regulations, a reduction of or exemption from the imposition of such a tax may be provided pursuant to the provisions of an applicable DTA.When a resident of the ROC is subject to income tax in accordance with the stipulations under the Income Tax Act, the Income Basic Tax Act as well as relevant laws and regulations, and a double taxation associating with the aforementioned taxation arises where the other Contracting State has imposed taxes on that resident pursuant to the provisions of an applicable DTA, such double taxation may be relieved in accordance with the provisions of such DTA or stipulations of other tax laws.When an investigator appointed by the tax collection authority concerned or the Taxation Administration of the Ministry of Finance investigates or audits the constituent elements and facts of a case that applies to a DTA, such investigator shall base these on the existence of actual economic relationships, and their related interests derived from such economic benefits.Where an investigator appointed by the tax collection authority concerned or the Taxation Administration of the Ministry of Finance investigates or audits all relevant facts and circumstances concerning a case that applies to a DTA in compliance with the provisions of the preceding paragraph, and such investigator considers it is reasonable to conclude that (1) one of the principal purposes of the relevant transaction or arrangement was, directly or indirectly, for a benefit under such DTA to be obtained (e.g., to avoid or reduce a tax liability, to defer a tax payment, or to refund a paid tax), and (2) granting such a benefit would not be in accordance with the object and purpose of the relevant provisions of such DTA from which the benefit was applied, in such a case the investigator may address the case in accordance with the relevant anti-abuse provisions provided under such DTA. In the case that the applicable DTA is absent an anti-abuse provision, the investigator may address the case in accordance with the stipulations of the Taxpayer Rights Protection Act or other laws and regulations that are regulated for dealing with a tax avoidance scheme.