Regulations Governing Assessment of Interest Expenditure on the Debts Owed by a Profit-seeking Enterprise to a Related Party in Accordance with the Condition that the Related Payments Shall Not be Considered as Expenses or Losses Article 2

(Scope)The excess interest expenditure on the debts owed directly or indirectly by a profit-seeking enterprise to a related party shall not be considered as expenses or losses if the proportion of related party debt to equity of a profit-seeking enterprise exceeds the specified ratio that is stipulated by the Regulations.When filing profit-seeking enterprise income tax return, the profit-seeking enterprise shall calculate excess interest expenditure as prescribed in the preceding paragraph in accordance with the Regulations. The Regulations shall also apply when the tax collection authorities conduct investigations and assessments of such cases.