Key Takeaways
- Financial audits, tax certification and capital verification have separate triggers.
- Tax certification thresholds include non-operating income.
- Confirm each engagement and filing deadline with a Taiwan CPA.
Foreign business owners in Taiwan need to distinguish annual financial reporting from tax certification and capital verification. These obligations arise under different rules, so meeting one requirement does not automatically satisfy the others. This guide explains when a CPA is needed and how to prepare.
What Are the Audit Requirements for Taiwan Companies?
Taiwan company audit requirements determine when a licensed CPA must audit annual financial statements, certify an income tax return or verify registered capital. Annual financial audits depend on statutory thresholds or special regulatory rules. Tax certification has separate triggers, while capital verification generally applies at incorporation and when registered capital changes.
The Importance of CPA Audit Reports
Independent financial scrutiny helps owners understand reported results and supports discussions with lenders and investors. For expatriate directors, knowing which CPA engagement is required also helps coordinate Taiwan compliance with overseas reporting needs. An audit provides assurance within its scope; it does not guarantee business performance.
What is a CPA Audit?
CPA engagements commonly described as financial, tax and capital audits examine financial reporting, certify tax filings or verify registered capital. Their triggers and deliverables differ.
Financial Audit
Under Company Act Article 20, year-end reports and profit distribution or loss offset proposals require shareholder consent or approval. Companies meeting the prescribed capital or size criteria must first obtain CPA certification of their financial statements.
STATISTIC: The Ministry of Economic Affairs’ threshold announcement, effective from the 2019 financial year, sets the following criteria for companies covered by the general Company Act rule. These remain the published thresholds reviewed for this 2026 update.
COMPARISON: Financial Statement Audit Thresholds
| Test | When an annual CPA audit is required |
| Paid-in capital | NT$30 million or more at the reporting period end |
| Net operating revenue | NT$100 million or more where period-end paid-in capital is below NT$30 million |
| Labour-insured employees | 100 or more at the reporting period end where paid-in capital is below NT$30 million |
STATISTIC-SOURCE: https://law.moea.gov.tw/LawContent.aspx?id=GL000656
The employee test concerns employees enrolled in labour insurance, rather than an unspecified workforce count. An NT$30 million bank loan is not a standalone threshold in this announcement, although a lender may separately require audited accounts. Publicly issuing companies may be governed by separate securities rules.
Tax Audit
Mandatory CPA tax certification must be performed by a CPA registered with the Ministry of Finance as a tax agent. Article 3 of the applicable regulations covers:
Specified financial businesses, including banks, insurers and securities businesses; securities investment consulting businesses are excluded from the securities category.
Profit-seeking enterprises that publicly issue shares.
Enterprises approved for corporate income tax exemption under relevant legislation whose annual net operating revenue plus non-operating income reaches NT$50 million.
Enterprises filing consolidated income tax returns under applicable legislation.
Other profit-seeking enterprises whose annual net operating revenue plus non-operating income reaches NT$100 million.
The NT$100 million tax test therefore differs from the financial audit revenue test. A company below the financial audit thresholds may still require tax certification because of its non-operating income or business category. CPA certification supports the tax filing; the tax authority retains its assessment powers.
Capital Audit
Company Act Article 7 requires CPA verification of capital for incorporation and registered capital changes, without the annual financial audit’s NT$30 million threshold. Incorporation certification documents must accompany the application or be submitted within 30 days after registration. Capital changes require prior CPA verification. A business sale does not automatically trigger capital verification; assess whether the transaction changes registered capital or creates another certification obligation.
Comparing the Three CPA Engagements
COMPARISON:
| Engagement | Main focus | Typical occasion |
| Financial audit | Annual financial statements | Applicable size or regulatory trigger |
| Tax certification | Income tax reporting | Mandatory category, income threshold or voluntary election |
| Capital verification | Registered capital | Incorporation or capital change |
Several engagements may apply simultaneously.
Benefit of a Financial Audit
Audited accounts can strengthen financial oversight and help identify reporting issues. They do not promise investment returns or automatically provide tax exemptions.
Under Income Tax Act Article 66-9, the additional tax on undistributed earnings is 5% for earnings years from 2018 onward. Permitted deductions include following-year losses certified by a CPA. This is a statutory deduction in calculating taxable undistributed earnings, rather than a general COVID-19 exemption or a current 5%-to-10% rate range.
Benefit of Tax Certification
Loss carryforward: Under Article 39, a company with complete accounting records may deduct tax-authority-assessed losses from the preceding 10 years if both the loss year and deduction year use approved blue returns or CPA-certified returns and are filed on time. CPA certification is therefore one qualifying route. Company size alone does not determine eligibility.
Entertainment expenses: Qualifying CPA-certified returns can access higher deduction limits. Expenses must still be business-related, supported by appropriate evidence and within the applicable ceilings. Timely delivery of the certification report and attachments is essential to retain the relevant tax benefits.
Audit and Filing Deadlines
Complete financial audits before shareholder approval. Companies limited by shares generally hold annual meetings within six months after year-end.
Calendar-year tax returns normally fall due in May. For 2025 internet-filed CPA-certified returns, 2026 deadlines were 1 June for filing/payment, 30 June for paper report delivery and 29 June for report upload. Confirm annual adjustments.
Securities Act Article 36 generally requires annual audited reports within three months and CPA-reviewed first-, second- and third-quarter reports within 45 days, subject to regulatory exceptions.
Preparing for Your CPA
Reconcile balances and assemble invoices, payroll, inventory schedules, capital documents and prior returns. Agree on scope and document deadlines with your CPA.
Retain accounting vouchers for at least five years and books and financial statements for at least ten years after annual closing, subject to statutory exceptions.
How Can We Help
Premia TNC can help foreign business owners organise accounting records, assess Taiwan audit and tax certification requirements, and coordinate the appropriate CPA engagement. Discuss your company structure, annual income, employee profile and planned capital changes with our Taiwan team to establish the services and timetable your business needs.
FAQs
What Are the Benefits of Tax Certification?
Eligible companies can preserve access to loss carry forwards and higher entertainment expense deduction limits. The benefits depend on statutory conditions, adequate supporting records and timely filing of the return, certification report and required attachments.
What Happens If a Company Does Not Comply?
Company Act Article 20 provides fines of NT$10,000 to NT$50,000 for responsible persons who breach its annual reporting or audit requirements. Failure to obtain mandatory tax certification leads to enhanced scrutiny under the tax certification regulations. Late certification attachments can also cause the return to be treated as an ordinary filing, affecting tax benefits.
How Should I Select a CPA for My Taiwan Company?
Select a Taiwan-licensed CPA with relevant industry experience and clear communication with overseas owners. For tax certification, verify the required tax-agent registration. Agree on scope, fees, document requirements and report submission responsibilities before the engagement begins.
