Accounting is an essential function of any business, and adhering to proper accounting standards is crucial for the financial health of a company. In Taiwan, there are specific accounting standards and requirements that businesses must follow to maintain compliance with the law.
This article will provide an overview of Taiwan Accounting Standards, including the difference between Taiwan GAAP and IFRS, Taiwan accounting requirements, financial audit requirements, outsourcing options, and frequently asked questions.
What is the difference between Taiwan GAAP and IFRS?
Taiwan generally follows Taiwan General Accepted Accounting Standards (TGAAP) for financial reporting, which are generally based on the International Financial Reporting Standards (IFRS). However, there are some key differences between TGAAP and IFRS. For example, IFRS has some chapters but TGAAP does not.
Taiwan accounting requirements
All the Taiwan companies must comply with the Taiwan accounting requirements. Here are the five key requirements for businesses operating in Taiwan.
Accounting period: In Taiwan, most businesses use the 1 January to 31 December calendar year as their accounting year, which is the same as the fiscal year for tax purposes. However, it is possible for a company to adopt a non-calendar year-end with prior authorization.
Currency of accounting: The New Taiwan Dollar (NTD) is the official currency in Taiwan, and businesses must maintain their accounting records in NTD. If transactions are conducted in foreign currencies, the exchange rates should be recorded and converted into NTD for reporting purposes.
Language of bookkeeping: Chinese Mandarin is the official language requirement for bookkeeping in Taiwan. Businesses must keep their accounting records in Chinese that can be easily understood by the government agency including the tax bureau.
Maintenance of accounting records: Companies in Taiwan are required to maintain accounting records in accordance with Business Entity Accounting Act (BEA). This includes keeping journals, a general ledger and subsidiary ledgers, as well as appropriate memorandum records. These records can be kept in paper or electronic format, and must be kept for at least five to ten years.
Electronic accounting system: Businesses in Taiwan may use electronic accounting systems, but they must meet certain requirements. If a computerised accounting system is used, it can be regarded as the company’s accounting records, as long as it meets the criteria set by the Ministry of Finance. These criteria include ensuring that the system is reliable, accurate, complete, and accessible.
In summary, businesses operating in Taiwan must comply with accounting requirements related to accounting period, currency of accounting, language of bookkeeping, maintenance of accounting records, and electronic accounting systems. Compliance with these requirements is essential for businesses to operate successfully in Taiwan and avoid penalties for non-compliance.
Taiwan financial audit requirements
Taiwanese law mandates that companies with a paid-in capital of at least NTD 30 million must produce audited financial statements. In addition, companies with paid-up capital of less than NTD 30 million but with more than 100 employees or annual net operating revenue exceeding NTD 100 million are also required to produce audited financial statements. The audit report must be issued by a certified public accountant (CPA) registered in Taiwan.
How to choose a proper agent for accounting outsourcing
Outsourcing accounting functions can be an excellent option for businesses, especially those that do not have the resources to maintain a full-time accounting department. When choosing an accounting outsourcing agent, it is essential to look for a reputable provider with experience in the industry. The provider should be familiar with local accounting standards and regulations and have a team of qualified professionals who can handle all aspects of the accounting function.
How we can help: outsource your accounting to Premia TNC
Premia TNC is a professional accounting and taxation firm in Taiwan with over 20 years of experience. Our team of qualified professionals provides a wide range of services, including accounting, taxation, payroll, and business advisory services. We have a deep understanding of Taiwan accounting standards and regulations and can help ensure that your company remains in compliance with the law. By outsourcing your accounting to us, you can focus on growing your business while leaving the accounting function to the experts.
Taiwan accounting: FAQs
Q1. What are the accounting records that companies in Taiwan are required to maintain?
Companies in Taiwan are required to maintain accounting records such as journals, a general ledger, subsidiary ledgers, and appropriate memorandum records, as per the Taiwan BEA. If a computerized accounting system is utilized, it can be regarded as the company's accounting records.
Q2. Are there any specific guidelines for preparing annual financial statements in Taiwan?
Yes, companies in Taiwan are required to prepare their annual financial statements in accordance with Taiwan GAAP.
Q3. What is the role of a Taiwan-licensed CPA in audits?
Companies in Taiwan must fulfill specific criteria to ensure compliance with regulations. One such requirement is the annual auditing and certification of their financial statements by a certified public accountant (CPA) licensed in Taiwan. Auditing in Taiwan encompasses three main areas: financial statement audits, income tax filing audits, and capital audits.
Q4. What is the scope of financial statement audits in Taiwan?
Financial statement audits are statutory audits that companies in Taiwan need to undergo if certain criteria are met. The audits are conducted by a Taiwan-licensed CPA and include an examination of the company's financial statements and related disclosures to provide reasonable assurance that they are free from material misstatement.
Q5. Are there any specific requirements for computerized accounting systems in Taiwan?
If utilized, computerized accounting systems can be regarded as the company's accounting records in Taiwan. However, they must still comply with Taiwan BEA requirements.
Q6. Where can I find more information about Taiwan accounting standards?
More information about Taiwan accounting standards can be found on the website of the Accounting Research and Development Foundation, which is responsible for providing guidance on accounting principles and practices.
