Compliance
Taiwan Profit-Seeking Enterprise Compliance: CFC Losses and Real Estate Loss Rules You Can’t Ignore
Key compliance updates in Taiwan affect profit-seeking enterprises: providing timely CFC financial statements to unlock 10-year loss deductions, and strict treatment of losses from property transactions under the "Housing-Land Unified Tax 2.0".
By NomadicTax Research Team • 5-8 min read • September 8, 2026
## Controlled Foreign Corporation (CFC) Losses: Deductibility Rules
Taiwan’s tax authorities now require that when a profit-seeking enterprise claims losses from its Controlled Foreign Corporation (CFC), it **must provide the CFC’s financial statements and other required supporting documents by the annual income tax filing deadline**. If not, the opportunity to deduct assessed losses from preceding years (up to 10 years) will be lost or require a certified extension. ([ntbt.gov.tw](https://www.ntbt.gov.tw/english/singlehtml/745d73afa03148fea8b721bb9403238e?cntId=2546ed1671834feb8cd2d823782c21d6&utm_source=openai))
### Key Compliance Steps
- **Timely submission**: Make sure all required financial statements (CPA audited or otherwise as required) are ready **before the filing deadline** (for calendar-year taxpayers, usually May). Late documents may disqualify loss deductions.
- **Utilise extension box on return**: If expecting delay, tick the A9 box on Page B7 during filing to apply for extension — but this may only be granted once and for up to 6 months. ([ntbt.gov.tw](https://www.ntbt.gov.tw/english/singlehtml/745d73afa03148fea8b721bb9403238e?cntId=2546ed1671834feb8cd2d823782c21d6&utm_source=openai))
## Real Estate Losses Under Housing-Land Unified Tax 2.0: Loss Deduction Limitations
The authorities in Taiwan have clarified that under the *Housing-Land Unified Tax 2.0*, **losses from selling land in certain situations cannot be deducted from general profit-seeking enterprise income**. These rules apply especially where:
- The asset does *not* fall under “first transfer of completed building and its site” category; and
- The taxpayer is strictly in the real estate development business.
For example, a company that purchased land, prepared it (graded, cleared) but did not complete construction, and then sold it, will find loss from that transaction ineligible to reduce *profit-seeking business income*. Instead, it must be carried forward and used only against real estate transaction gains going forward under the same rate bracket. ([ntbt.gov.tw](https://www.ntbt.gov.tw/singlehtml/41ae3594197f4f69b47753ce08188516?cntId=58058a7a38874684b47f8b8172fc43af&utm_source=openai))
### Practical Implications
- **Transaction classification matters**: Developers should clearly document whether a sale is part of first building transfer or just land disposal.
- **Strategic timing**: Plan development and transfer stages with care; certain transfers may change tax exposure significantly.
## Tips for Smooth Compliance in Both Areas
- Keep robust legal and accounting documentation: purchase and sale contracts, land acquisition costs, proof of construction completion, etc. as well as CPA audits of CFCs.
- Use extension opportunities where needed, but only after confirming eligibility.
- Early planning of property transaction timelines to ensure any losses are used optimally.
## Case Example
**Company C** holds 100% of CFC D in a low-tax jurisdiction. In 2025, CFC D incurs NT$8 million loss. Company C intends to deduct this loss and prior assessed losses for up to 10 years: ensure Company C files its 2025 return with the loss, includes financial statements before deadline, or ticks Box A9 on Page B7. If missed, the deductions are lost.
Meanwhile, **Developer E** bought land in 2017, cleared it, but sold in 2026 before building a house. Although that transaction resulted in loss, under Housing-Land Unified Tax 2.0 rules, Developer E cannot deduct that loss against general business profits; instead it must be kept to offset real estate-transaction gains.