Common Corporate Tax Filing Errors
The Central Region National Taxation Bureau of the Ministry of Finance announced that the 2024 Corporate Income Tax Return filing season has begun. To assist businesses in ensuring accuracy in their filings, the Bureau has compiled a list of common errors and omissions encountered in corporate income tax returns. Businesses are advised to review these points carefully to avoid mistakes and ensure compliance.
- Business Revenue:
(1) Unreported foreign exchange income from triangular trade and exports.
(2) Export income recognized based on delivery or payment date instead of the official declaration or postmark date, violating Article 15-2 of the Assessment Regulations.
(3) Small-scale enterprises starting invoice issuance mid-year fail to report sales from prior periods assessed under deemed VAT.
- Cost of Goods Sold:
(1) Income from sale of scrap materials is offset against revenue but not reported as other income or cost reduction.
(2) Tax refunds on imported materials are not deducted from costs in the same fiscal year, violating Article 33-2.
- Operating Expenses:
(1) Overseas staff expenses (salary, travel, etc.) lack proof of business relevance, and no corresponding income is declared.
(2) Bad debts are claimed without meeting legal conditions such as bankruptcy or long-term uncollectibility.
(3) Non-business or personal expenses are misclassified as business losses.
- Non-operating Income and Losses:
(1) Gains from the sale of foreign-registered funds or securities are not reported as taxable capital gains.
(2) Interest-free loans to shareholders or third parties are not taxed on deemed interest as per Article 24-3.
(3) Income such as insurance payouts, export tax refunds, interest, overseas income, and subsidies is underreported.
- Undistributed Earnings:
(1) Investment companies fail to use the equity method for recognizing post-tax earnings, underreporting retained earnings.
- Other Issues:
(1) Foreign tax credits are miscalculated by not deducting related costs and expenses from foreign income before determining the credit limit.
