Guidelines for Deducting Overseas Commission Expenses in Corporate Income Tax Filings
The National Taxation Bureau of Taipei (NTBT) reminds businesses that if they wish to claim foreign-paid commissions (overseas commissions) as deductible expenses when filing their corporate income tax returns, they must not only furnish valid contracts or other documents that prove an actual intermediary agreement, but also pay close attention to the legal status of the commission recipient. According to the regulations (Audit Guideline 92, for Profit-Seeking Enterprise Income Tax), commissions paid to certain payees will not be recognized — specifically, if the payment is made to the exporter itself or its employees, foreign distributors, or foreign companies that directly purchase from the exporter.
For example, in one 2023 case, a company declared NT$10 million in commission expenses. During audit, it was discovered that NT$2 million were paid to an employee of a Hong Kong client of the exporter. Because the recipient fell under the disallowed category, NTBT disallowed that portion, resulting in a recalculation and additional tax owed.
NTBT urges enterprises to carefully verify that the overseas commission’s payee is eligible under the rules, and to prepare complete documentation (contracts, intermediary-service evidence, payment proofs, correspondence, etc.) — failing which the deduction may be denied, and the company may be required to pay additional taxes.
