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13.4.2. Specific TP Issues

Management Fees

In general, management fees are deductible as they are necessary and relevant to a business' operations. However, they have come under greater scrutiny and a taxpayer must maintain sufficient detailed records of all management fee expenses in order to prove necessity and relevancy of the fees.

Permanent Establishments

If a DTA is in place between Taiwan and another jurisdiction, and an enterprise in that jurisdiction has a PE in Taiwan, the income attributable to the PE will be subject to Taiwan's transfer pricing rules. The PE will be treated as an independent enterprise conducting related party transactions with the enterprise in the other jurisdiction. Sufficient documentation evidencing that income attributable to the PE is in compliance with Taiwan transfer pricing rules must be kept, and can be subject to investigation.

However, if all the income of the enterprise in the other jurisdiction is attributable to their PE in Taiwan, it will not be subject to transfer pricing documentation requirements.