In order to obtain tax benefits, taxpayers will enter into or implement certain tax avoidance transactions. Article 61A of the Anti-Avoidance Regulations of the Tax Regulations emphasizes that the sole or main purpose of only cracking down on the relevant transactions is to obtain tax benefits from them. If the transaction is clearly arranged for more than one purpose, and it is not determined that one of the purposes is the main tax benefit, the Inland Revenue Department may not be able to invoke section 61A.

When inferring that the sole or main purpose of the transaction is tax benefits, the Inland Revenue Department will consider the following matters:

• The way the transaction is concluded or executed

• The form and substance of the transaction

• The ultimate tax result that the transaction can achieve

• Financial situation before and after the transaction, changes

• All relevant parties’ financial changes due to transactions

• Changes in rights and obligations before and after the transaction

• Regarding the participation of overseas persons in transactions

Since each of the above matters is important, the Inland Revenue Department will thoroughly consider all matters before reaching a conclusion.

The above information is for reference only. If in doubt, we welcome your tax inquiries

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